US jobs growth was much weaker than expectations, raising questions about whether the Fed could cut 50 basis points next week, rather than 25 basis points. Also, Japan’s Prime Minister resigned last night, which may weaken the yen today.
In our Deep Dive interview, ANZ’s Group Chief Economist Richard Yetsenga looks at why long bond yields are rising and what the weak US jobs data means for global interest rates.
5 things to know in 5 minutes:
US jobs grew just 22,000 in August, which was barely a third of the consensus forecast. US ANZ Economist in London Bansi Madhavani says that sort of monthly growth is not enough to keep unemployment stable.
Bansi says market expectations of a 50 basis point hike by the Fed next week grew after the weak jobs data.
Japan’s nominal wages grew 4.1% in July from a year ago, up from an annual growth rate of 3.1% in June, adding support for the Bank of Japan to hike rates again, says ANZ Head of FX Research Mahjabeen Zaman.
However, the resignation of PM Shigeru Ishiba last night and his possible replacement with a candidate less keen on higher rates could weaken the yen today, says Mahjabeen.
Philippines CPI inflation rose to to 1.5% in August from a year ago from an annual rate of 0.9% in July, largely due to food price inflation. ANZ Economist Arindam Chakraborty says inflation remains benign and another rate cut is still likely in the December quarter.
Cheers,
Bernard.
PS: Catch you tomorrow with a closer look at key US inflation data coming up this week.
