Daily update
Daily update
- The US employment report adds a rather unreliable narrative to the US labor market data. Expectations are for a dull report, with an unchanged unemployment rate and a sub-100,000 non-farm payrolls number. However, the range of estimates is particularly scattered. When job creation is this weak, the composition of the workforce may distort the average hourly earnings data without saying anything about wage growth.
- US labor data matters because in the Wile E. Coyote trajectory consumers need to cut their savings rate to pay for higher prices and maintain spending. That process is threatened if price increases overwhelm available savings, or if consumers feel fearful about the future. Fear of the future tends to correlate with job security. So far, the “no fire” part of the US “no hire, no fire” labor market is reassuring consumers, supporting spending even as real incomes suffer.
- The calendar is otherwise dull. Bank of England Governor Bailey speaks after markets close, but this is to mark the anniversary of Smith’s “Wealth of Nations” being published. A fascinating subject, which is unlikely to move markets.
- News that there is no ceasefire between Israel and Lebanon, or that talks between Iran and the US are stalling is surprising no one. Oil prices have barely moved.