October 1, 2022

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US job growth remained strong in June

US job growth remained strong in June

From

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Source: FactSet


Stocks fluctuated and bond yields rose on Friday After the government’s job report showed a Greater than expected gain in employment In June, a positive labor market development but a sign that high inflation may continue.

Better-than-expected employment numbers may dispel some concerns about an impending economic slowdown, but with prices rising rapidly, a strong labor market and rising wages may complicate the Fed’s fight against inflation. If the central bank continues to aggressively raise interest rates to rein in stubbornly high inflation, it may eventually happen Pushing the economy into recession.

The S&P 500 swung between small losses and gains on Friday and closed slightly lower. Friday’s trading was followed by four consecutive daily increases, a rare extension during the period when The trend was downward. The index fell about 21 percent in the first half of the year, its worst start to this year Since 1970.

away from the labor market, Other Economic Signalswhich range from retail sales to housing to copper prices, reflects the economic slowdown already underway, lending credibility to some analysts Recession Warnings.

“On the face of it, employment growth at 300,000-plus per month does not indicate a recession,” said Michael Gaben, head of US economics at Bank of America. But he said the Fed is trying to bring down inflation, and “will need to do so by switching to more restrictive monetary policy,” pointing to more significant rate increases in the future.

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The yield on 10-year Treasuries, a benchmark for borrowing costs, jumped to just over 3 percent after the jobs report was released. But the 10-year yield remained moderately lower than the 2-year yield, creating the so-called Inverted yield curvea rare signal that is often considered a precursor to stagnation.

Economists at Deutsche Bank expect a recession in the US next year. “I think the yield curve is approaching that scenario,” said Tim Wessel, strategist at the bank.

oil prices, that was slipping As fears of a slowdown spread among traders, with West Texas Intermediate crude up nearly 2 percent, at more than $104 a barrel.

The euro fell in early trade and almost reached a one-to-one parity with the US dollar before heading higher, while the European Stoxx 600 Index closed 2.5 percent higher this week. The British pound held most of Thursday’s gains against the dollar, which came after Boris Johnson said he would He resigned as Prime Minister of Britain. The FTSE 100, the UK stock market index, ended the week slightly higher.

Asian markets are mostly higher, although falling from Friday’s highs after Shinzo Abe, the former Japanese prime minister, He was shot at a political rallyshock the nation. Mr. Abe, the longest-serving commander in Japan’s post-war history, later He died of his injuries at the age of 67.