- Canada August employment -39.7K vs +15.0K expected
- Fed's Waller says he supports 'another signficant hike' this month
- Fed's George says she prefers steadiness and purposefulness of rate hikes over speed
- More from Waller/George: We do not want inflation expectations to get unanchored
- ECB likelier to hike by 50 bps than 75 in October - sources report
- BofA now sees 75 bps Fed hike, expects headlines CPI to fall in August
- Baker Hughes US oil rig count 591 vs. 596 last week
- Atlanta Fed GDPNow estimate falls to 1.3% from 1.4% on September 7
- US wholesale sales for July -1.4% vs. 1.4% estimate
- Video: Why this could be the bottom in Europe
- Canada capacity utilization for Q2 83.8% vs. 82.0% last quarter
- Heads up: BOE postpones September policy meeting by one week
Markets:
- S&P 500 up 61 points, or 1.5%, to 4067
- US 10-year yields up 2.5 bps to 3.31%
- WTI crude oil up $2.78 to $86.32
- Gold up $8 to $1715
- AUD leads, USD lags
The economic highlight was the Canadian jobs report and for the second month, it stumbled. That may begin to give the Bank of Canada pause on its aggressive hiking path but it didn't hurt the loonie too badly as oil gained and the US dollar stumbled broadly. USD/CAD rose to 1.3050 from 1.3000 on the report but finished halfway in between.
The peak of today's USD weakness came late in Asia but there was a modest turn from there as USD/JPY rebounded from a low of 141.51 to 142.69. There are many people talking about a dollar top and with Europe trying to solve the energy crisis, there's some scope there. But USD/JPY remains the main event this year and aside from some jawboning, the BOJ hasn't budged.
In FX, US trading was choppy and generally sideways but that wasn't the case in equities as the Nasdaq led a rally. That led to the first gain in five weeks and it was a hefty one at 4.1%.
Eyes are on next week's CPI and the possibilty of a negative headline. The Fed has essentially pushed it aside as a decided for the Sept 21 FOMC but a low reading could tee up a less-hawkish statement. What market participants are wondering about are the balance between headline and core in CPI. There's ample reason to expect a headline rollover in the near term but that's not so clear with core, which is forecast to rise 0.3% next week. How much is that going to have to slow to halt the Fed's advance?
The bond market continues to signal a higher Fed top and Waller endorsed that today by talking about 4% as his baseline. Fed funds have edged toward there for the March meeting (implied 4.01%) while the 2-year yield hit a new cycle high a 3.56% on Friday.
Have a great weekend.
