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US jobseekers banking on Trump making good on promises

Share Markets:

Sentiment softened earlier on mixed US labour market data, but recovered after comments from Fed officials spurred rate hike expectations.

The US stockmarket strengthened, following the gains in Europe. The Dow rose 0.9%, the S&P 500 lifted 0.7% and the Nasdaq was up 0.5% for the session.

Interest Rates:

US government bond yields fell following the payrolls data, with investors focused on the disappointing wages numbers.

Bond yields recovered some of those losses later in the session following comments from Fed officials. Fed officials Evans and Williams said they saw three rate hikes this year as possible, causing a lift in US yields.

The US government 10-year bond yield finished down 1 basis point at 2.46%. The 2-year government bond yield also finished down 1 basis point at 1.20%.

Japanese government bond yields fell, with the 10-year yield pulling back from a 1-year high.

The Bank of Japan bought Japanese government bonds signalling it intends to adhere to "yield curve control", where it keeps the benchmark yield around zero percent.

After hitting a high above 0.15% earlier in the session, the yield on 10-year Japanese government bonds fell to 0.10%.

Foreign Exchange:

The US dollar index fell after the payrolls data but partly recovered thereafter to close down 0.1% on the day.

The Euro strengthened, holding onto its post-payrolls gains. EUR/USD rose from 1.0713 prior to the payrolls to 1.0802 earlier this morning.

The Yen had a choppy session and finished higher against the US dollar. USD/JPY fell from 113.20 to 112.32.

The Australian dollar finished stronger, with AUD/USD rising from around 0.7622 to 0.7695 before consolidating.

The New Zealand dollar similarly strengthened, with NZD/USD similarly rose from 0.7249 to 0.7331 and consolidated. AUD/NZD ranged between 1.0485 and 1.0530.

Commodities:

The copper price fell on concerns about demand for China following a rate hike from China's central bank and weaker Chinese manufacturing data on Friday.

Australia:

There was no major economic data released locally on Friday.

China:

The People's Bank of China (PBoC) raised its short-term interest rates on Friday.

The PBoC lifted the seven-day open market operations rate by 10 basis points to 2.35%, while also lifting rates for the standing lending facility (SLF) short term loans.

The Caixin-Markit Manufacturing Purchasing Managers' index (PMI) fell to 51.0 in January, from 51.9 in December. 

The result shows China's industrial sector continues to perform well with factories enjoying their longest period of expansion since 2011.

Europe: 

The Markit Eurozone services PMI edged up to 53.7 for the final January reading. This leaves the services index equal to where it was in December and above a reading of 50 signalling expansion in services sector activity in the Eurozone.

Retail sales were weaker than expected in December, falling by 0.3%, confounding consensus expectations for an increase. This follows a downwardly revised decline of 0.6% in November (previously reported as a 0.4% drop).

For the year to December, Eurozone retail sales rose by 1.1%, down from an increase of 2.5% in the year to November.

United Kingdom:  The Markit/CIPS services PMI felt o 54.5 in January, from 56.2 in February. The index remains above 50 pointing to ongoing expansion in UK services sector activity.

United States: 

US payrolls rose by 227k in January, which was above consensus expectations for a 180k increase. It was the largest monthly gains since September.

The unemployment rate, however, rose to 4.8% in January, from 4.7% in December, reflecting increased workforce participation.

The workforce participation rate rose to 62.9% in January, which was the highest since September and up from 62.7% in December. The underemployment rate lifted to 9.4% from 9.2% in December.

Despite the positive news on employment, wages growth was disappointing in January. Average hourly earnings rose just 0.1% in January (consensus expectations were for a 0.3% increase).

At the same time hourly earnings growth for December was revised down to an increase of 0.2%, previously reported as a 0.4% gain.

For the year to January, average hourly earnings rose 2.5%, down from 2.8% in the year to December.

Factory orders were stronger than expected, lifting by 1.3% in December, following a decline of 2.3% in November. Excluding transportation, factory orders jumped 2.1% in December.

For their final December reading, durable goods orders fell 0.5%, but excluding transportation were up 0.5% for the month.

The Markit US services PMI rose to 55.6 in January, from an earlier estimate of 55.1 and a reading of 53.9 in December.

The reading is further above 50 signalling more rapid expansion in US services sector activity.

Topics:  donald trump economy st george economics unemployment



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