Friday’s (September 3rd) weaker-than-expected US employment report may lower any expectations that the Federal Reserve…
Global equities edged downwards last week, as the S&P 500 saw its first
five day losing streak since February. An overhang from the previous week’s
jobs report, the perennial inflation worries, and the persistency of the delta
variant in the U.S., were all flagged as potential reasons by market
commentators. In the U.S. on Friday, the Labor Department reported that
producer prices rose 0.7% in August, slightly above consensus expectations.
The latest ‘JOLTS’ survey last Wednesday revealed there was a record 10.9
million jobs waiting to be filled in July – nearly a million more than forecasted,
whilst weekly job claims fell to a pandemic era low of 310,000. The above
releases did nothing to shift the narrative that a lack of both materials and
labour supply could curtail growth for the rest of 2021.
Meanwhile, on the political front, a path for approving President Biden’s
infrastructure bill remains unclear as there are growing divisions within the
progressive and moderate caucuses of the Democratic Party on Capitol Hill.
Treasury Secretary Yellen also reminded legislators that the U.S. debt ceiling
would most likely be hit once again in October.
In Europe, the ECB signalled that it would reduce the pace of asset
purchased under the ‘PEPP’ programme before the end of the year, which
was seen as a direct response to the strengthening eurozone recovery.
However, policymakers left the headline policy rates unchanged and the prepandemic APP (Asset Purchase Programme) remains intact. Elsewhere in
central bank activity, the Reserve Bank of Australia, keep both its cash rate
and three year bond yield target unchanged at 0.10%. The U.K. saw GDP in
June slip to 0.1% on a monthly basis as a decent figure for the industrial
sector was dragged down by weakness in services.