OPINION
Market Rating Before FOMC MeetingJan 31
U.S. Unemployment Rate Rises from 50-Year Low
Last Friday, in global markets, eyes were on the nonfarm payrolls (NFP) report by the US Department of Labor.
According to the announced data, nonfarm payrolls increased by 261 thousand people in October, above the market expectations of 200,000 people. The data was revised as 315 thousand people for the previous month.
In this period, the unemployment rate rose to 3.7%, despite the market's forecast of 3.6%. The unemployment rate was 3.5% in the previous month, the lowest in 50 years.
On the other hand, the labor force participation rate moderately receded to 62.2% from 62.3% in October. Average hourly earnings, increased by 0.4% in October compared to the previous month, while it was at 4.7% on an annual basis, in line with market expectations.
The dataset revealed that labor market conditions had decreased somewhat. In other words, while it was clearly seen that the NFP lost momentum compared to the previous month, the fact that the unemployment rate rose from the lowest level of the last 50 years at 3.7%, created an expectation that the US Federal Reserve (FED) is now closer to normalization in monetary policy as of December. This significantly eased the pressure on assets with high risk sensitivity, especially stocks.
The leading indicator, the SP500 index, has recovered up to 3 785 points with a gain of about 2% since the data was announced on Friday, while NQ100, which opened the week with 10 758, reached 10 900 levels with a gain of approximately 1.40%.
After the moderate retreats in the dollar, we see that the pressure on ounce gold has eased. Testing $1681, its highest level since October 13, the yellow metal is currently trading at 1675 levels.
However, the US consumer price index (CPI) data for October, which will be announced on Thursday, October 10, may make market expectations more evident at this point. It should be noted here that the CPI decreased from the peak of 41 years with 9.1% in June to 8.5%, 8.3%, and 8.2% in July, August, and September, respectively. The convergence of the CPI to the expectations of 8.0% in October may increase the possibility of a softer interest rate hike of 50 basis points by the FED in December.
According to the announced data, nonfarm payrolls increased by 261 thousand people in October, above the market expectations of 200,000 people. The data was revised as 315 thousand people for the previous month.
In this period, the unemployment rate rose to 3.7%, despite the market's forecast of 3.6%. The unemployment rate was 3.5% in the previous month, the lowest in 50 years.
On the other hand, the labor force participation rate moderately receded to 62.2% from 62.3% in October. Average hourly earnings, increased by 0.4% in October compared to the previous month, while it was at 4.7% on an annual basis, in line with market expectations.
The dataset revealed that labor market conditions had decreased somewhat. In other words, while it was clearly seen that the NFP lost momentum compared to the previous month, the fact that the unemployment rate rose from the lowest level of the last 50 years at 3.7%, created an expectation that the US Federal Reserve (FED) is now closer to normalization in monetary policy as of December. This significantly eased the pressure on assets with high risk sensitivity, especially stocks.
The leading indicator, the SP500 index, has recovered up to 3 785 points with a gain of about 2% since the data was announced on Friday, while NQ100, which opened the week with 10 758, reached 10 900 levels with a gain of approximately 1.40%.
After the moderate retreats in the dollar, we see that the pressure on ounce gold has eased. Testing $1681, its highest level since October 13, the yellow metal is currently trading at 1675 levels.
However, the US consumer price index (CPI) data for October, which will be announced on Thursday, October 10, may make market expectations more evident at this point. It should be noted here that the CPI decreased from the peak of 41 years with 9.1% in June to 8.5%, 8.3%, and 8.2% in July, August, and September, respectively. The convergence of the CPI to the expectations of 8.0% in October may increase the possibility of a softer interest rate hike of 50 basis points by the FED in December.
