LiveWire

The strong jobs report is expected to keep pressure on the US Federal Reserve to raise interest rates. However, it alleviates the worst fears of a boiling hot jobs report as we had last month, which saw the market rapidly re-pricing higher interest rates for longer. We also note that inflation in terms of average hourly earnings is decelerating, an encouraging sign that labour tighteness is easing. Today’s February US Jobs report should be a win for equity investors given it is not as strong as some had feared, and sentiment is very negative. Also, the participation rate ticked higher to 62.5%, above Street forecast of 62.4%. In aggregate, there are enough offsets that make the report positive. If we add in the bank stress with SVB, it’s also a factor that should maintain the Fed to go for 25bps rate hike on 22nd of March. 

The jump in US jobless claims to 211,000 in newly filed claims last week, surpassed all economist's estimates. It is a positive twist for stocks, ahead of the key US February jobs report on Friday. 

As outflows in US stocks grow, it presents a slightly bullish short-term outlook. It has been 9 straight weeks of equity fund outflows (MF+ETF) in 2023. A total of $34.1bn left US stock funds. And did you know, that almost all of the net gains for the S&P 500 over the past 23 years have come after investors have moved money out of stock?
Source: Ned Davis Research, Seth Golden

The euro fell against the dollar on Thursday after Eurozone inflation data came out not as high as investors had feared. Also, US Treasury yields pushing higher kept selling pressure on the euro.

The WSJ published an interesting article this morning about how the US jobs market is showing signs of cooling. Markets are looking for both signs of cooling inflation, and jobs, to prompt central banks to slow down tightening. The WSJ paper highlights data from recruiting firms signaling slowing demand for labor. To monitor: on 8th March the January JOLTs Job Openings and Feb nonfarm employment, and more importantly, the US February jobs report on Friday 10th March. And the week after, it will be back to inflation data with Feb CPI on March 14th.