Today’s US jobs report is not going to mater much, let’s face it.
Fed Chair Jay Powell has already come out and said he will recommend a 25 basis point hike at their meeting later this month. Inflationary pressures are surging. This week, we have seen commodities such as crude oil, wheat and corn rise massively, along with aluminium and a few other base metals. This is all to do with Russia’s invasion of Ukraine, fuelling fears of supply crunches. Stocks are reeling and the euro has fallen below $1.10 ahead of next week’s ECB meeting. It is risk off – a black Friday, if you will.
But for what it is worth, analysts are expecting to see another solid showing from the US jobs market. Some 400K net new non-farm jobs are expected to have been created in February. More to the point, average hourly earnings, a key indicator of price pressures, are expected to have risen another 0.5% month-over-month to take the year-over-year reading to 5.8% form 5.7% previously.
Regardless of the outcome of the jobs report, I am expecting risk aversion to remain the dominant theme heading into the weekend, meaning we are unlikely to see a big turnaround in the stock markets. No sane investors will want to take the risk of having huge exposure to markets that have been roiled by the Russia’s invasion of Ukrainian given how volatile the situation is going to be – that’s unless something changes dramatically in the next few hours. At the time of writing, the major European indices were down 3-4 percent.
I am also expecting gold to go well north of $2,000 in days ahead. The precious metal is currently consolidating its gains after the big breakout recently. But as nothing has changed fundamentally, I expect a continuation in the ongoing bullish trend, possibly as soon as later this afternoon
