US jobs growth was much stronger than expected, but the resulting initial bond market selloff was eventually tepid as it became clear wage growth and unemployment weren’t quite so inflationary.
In our bonus deep-dive interview, ANZ Australia Senior Economist Adelaide Timbrell details the RBA’s level of comfort with financial stability in its half-yearly review.
5 things to know
US Nonfarm Payrolls grew 336k in September from August, double expectations. Unemployment was unchanged at 3.8% and hourly wage growth averaged a modest 0.2% for the month and 4.3% for the year.
Financial market expectations for a hike next month nudged up to 33%, while expectations for a hike in December rose to 50%. ANZ Group Chief Economist Richard Yetsenga sees the Fed holding with a hawkish tilt.
The US 10-year Treasury yield initially jumped 15 basis points to 4.89%, but ended at 4.79%. The S&P 500 closed up 1.2% and the Nasdaq rose 1.6%. The US dollar initially rose, but subsided through Friday night. The A$ fell to 63.26c, but opens around 63.85. The NZ$ opens at 59.90c.
Richard says the higher US bond yields and lower asset prices are all part of the tightening mechanism.
US CPI figures for September on Thursday are the main focus for global markets. ANZ’s Head of G3 Economics Brian Martin says market expectations are grouped around a 0.3% rise in monthly headline and core inflation, which would allow annual inflation to ease to 3.6% and 4.1% respectively.
Bernard
PS: Catch you tomorrow with a look ahead at what’s at stake for the New Zealand economy in its general election this weekend.
