The strong disappointment for the US job market makes an encore. Wall Street in the grip of uncertainty, with the Dow Jones not very moving and slightly down around 34,729 points; the S&P 500 is also in plaster, at 4,400, just as the Nasdaq is nailed close to 14,657 points.
After the shock employment report in August, which highlighted a decidedly low growth in new jobs compared to what analysts estimated, the September report released today again sparked a strong concern for the employment trend in the States. .
In addition to the disappointment, the Fed’s tapering announcement, the $ 120 billion-a-month QE cut that same number one Jerome Powell said would be launched by the end of the year, however, was still questioned “soon. “.
The payroll report released today by the Department of Labor, said Jamie Cox, Managing Partner for Harris Financial Group, “may in fact question the start of tapering scheduled for later this year.” Of course, “there are many positive factors in the report, such as the recovery of the average hourly wage, but not enough to sweeten the pill: the picture of employment remains confused, due to the variants linked to Covid”.
The Wall Street Journal itself, in reporting the data, writes that, according to several entrepreneurs and economists, it is possible that the spread of the Delta variant during the summer has frightened Americans looking for a job, slowing down the recovery of occupation.
Of course, the numbers make the skin crawl to those who, like Goldman Sachs, had predicted a growth in payrolls of 600,000 units in September: and instead the US economy created only 194,000, a number much lower even than to the growth of 500,000 employees estimated by the consensus.
Sure, the unemployment rate dropped from 5.2% to 4.8%. But the labor force participation rate was 61.6% compared to the expected 61.7%, still remaining below the 62.8% preceding the Covid-19 pandemic.
It is true that the August figure was revised upwards to +366,000 units from the 235,000 unit growth initially disclosed. But analysts had forecast growth of 720,000 units for that month.
Hourly wages rose an average of 19 cents, or 0.6%, to $ 30.85, up a whopping 4.6% year-on-year. It will be good news, but not for those who fear the specter of stagflation.
The unemployment rate, albeit down, remains higher than the 3.5% preceding the Covid-19 pandemic.
Wall Street is therefore uncertain what to do, even if it is preparing to end the week in positive territory.
A not inconsiderable threat, however, comes from the 10-year US Treasury rates which, prior to publication, had even exceeded the 1.60% threshold, betting on a solid relationship on the American job market.
There was no such report, but the yields still travel around that threshold and at 1.59% they are close to the record since last June 4th. On the other hand, the dollar weakens, albeit not to a significant extent.
The euro is hovering near the lows of the last 14 months, barely moving at $ 1.1550.
On the other hand, gold is extending its gains, with futures on the contract expiring in December jumping about 0.80%, above the threshold of $ 1,774 an ounce.
TD Securities analysts point out in a note that there are several reasons for hoarding gold:
“The higher wages and the failure to increase the labor force participation rate confirm that the stagflation theme will remain intact, and gold could be the ideal hedge against the stronger stagflationary winds. With the global energy crisis intensifying. , hitting the production of goods around the world and the supply chains of Europe and Asia, the reasons for holding the yellow metal are becoming more and more compelling. “
Meanwhile, good news for the United States has come from the US Congress, where the impasse on the US debt ceiling has been resolved, at least for now.
The Senate yesterday approved a bill aimed at raising the ceiling on US debt by $ 480 billion: an amount that the US Treasury Department believes is sufficient to allow the government to pay its expenses until next December 3.
The present value of US debt is $ 28.4 trillion against a ceiling of approximately $ 28.8 trillion.
The proposal will arrive in the next few days in the House of Representatives led by Democratic leader Nancy Pelosi for its final passage.
At that point, according to the established procedure, the American President Joe Biden will sign the bill: the signature will be affixed by next October 18, a date that Janet Yellen, US Treasury Secretary, has identified as the deadline for suspending or lifting the US debt ceiling and thus avoid US default.
Wall Street is gearing up for the start of the quarterly earnings season, scheduled for next week. The first financial results for the third quarter of the year will be released by JPMorgan, BlackRock and Delta Airlines.