Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
An account already exists for this email address, please log in.
Good news on jobs scares US stockmarkets
June brought the best monthly US jobs growth of the year, but stockmarkets were not best pleased.
June brought the best monthly US jobs growth of the year, notes Chris Matthews on MarketWatch, but stockmarkets were not best pleased. Shares fell back on the strong data at the end of last week amid worry that good jobs growth means interest-rate cuts by the Federal Reserve are less likely.
US non-farm payrolls rose 224,000 in June. In May only 72,000 jobs were created.The jobs news means that there is now "no chance of a 50 basis-point rate cut" later this month, writes John Authers on Bloomberg. Yet many traders are expecting rates to fall by 0.25% when the Fed next meets. The "guts" of the employment data were less encouraging than the headline figure implies. Unemployment actually ticked up slightly to 3.7%. Manufacturing is also in bad shape. The June IHS Markit manufacturing index fell to 50.1, its worst reading since 2009.
Don't be distracted by the noise of monthly payroll figures, says Anatole Kaletsky for Gavekal Research. There is no consistent evidence to suggest that a US recession or serious weakening is on the cards. Consumer spending growth, which accounts for 70% of GDP, continues to chug along. Some will point to an inverted yield curve the yield on the ten-year Treasury bond remains below that of the three-month note but in an era of near-zero interest rates the bond market has lost its old power to signal impending doom.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Note that today's "ultra-expansionary monetary policy" ultimately caused an outbreak of inflation when it was tried in the 1960s but markets appear "completely indifferent" to this risk today. If an inflationary surprise is around the corner then a Fed rate cut can only hasten the reckoning. Still, as Luke Bartholomew of Aberdeen Standard Investments told CNBC, "markets have come to expect a cut [and] will fall out of bed if they don't get one."
Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
