North American News
US stocks close lower. NASDAQ lower for the 6th consecutive day
- Major indices down for the 3rd consecutive week
The major US indices are all closing lower.
- The NASDAQ is down for the 6th’s consecutive day. The index is down -7.98% from the closing level on August 25
- The S&P and Dow industrial average fell 5 the last 6 trading days
- Energy led the S&P 500. Communication services was the big loser
- S&P 500 and worst weekly losing streak since June (3 weeks lower)
- NASDAQ and S&P closed at the lowest level since July 26
- The Dow is closing at its lowest level since July 18
The final numbers are showing:
- Dow industrial average -338 points or -1.07% at 31318.43
- S&P index -42.59 points or -1.07% at 3924.27
- NASDAQ index -154.25 points or -1.31% at 11630.87
- Russell 2000-13.07 points or -0.72% at 1809.74
For the trading week:
- Dow industrial average fell -2.97%
- S&P index fell -3.29%
- NASDAQ index fell -4.21%
- Russell 2000 fell -4.74%
US August non-farm payrolls +315K vs +300K expected
- August 2022 US employment data from the non-farm payrolls report
- Prior was +528K (revised to 526K)
- Two month net revisions -108K
- Estimates ranged from +75K to +450K
- Unemployment rate 3.7% vs 3.5% expected
- Prior unemployment rate 3.5%
- Participation rate 62.4% vs 62.1% prior (was 63.4% pre-pandemic)
- U6 underemployment rate 7.0% vs 6.7% prior
- Average hourly earnings +0.3% m/m vs +0.4% expected (prior +0.5%)
- Average hourly earnings 5.2% y/y vs +5.3% expected (prior 5.2%)
- Average weekly hours 34.5 vs 34.6 expected
- Change in private payrolls 308K vs +300K expected
- Change in manufacturing payrolls +22K vs +20K expected
- Household survey +440K vs +179K prior
US July factory orders -1.0% vs +0.2% expected
- Factory orders and revisions to durable goods orders
- Prior was +2.0%
- Durable goods orders -0.1% vs +0.0% prelim
- Durable goods orders non-defense ex-air +0.3% vs +0.4% prelim
- Durables ex transport +0.2% vs +0.3% prelim
- Factory orders ex-transport +0.2% vs +1.4% prior
US 2-year yields plunge
- Was there a technical move because of the turn of the calendar?
US 2-year yields are now down 12.2 basis points on the day to 3.39%. The easy explanation is that the fall in the unemployment rate in the jobs report along with a slight miss on wage growth is dovish.
Commodities
Gold extends bullish correction on higher US Unemployment Rate
- Gold rallies as the US dollar and yields sell off after the NFP miss in the details.
- The headline was a touch above expectations but the UR and earnings disappointed.
- Fed funds futures traders are still pricing in a September rate hike of 75 basis points after the jobs report.
The gold price is higher on the Nonfarm Payrolls on the knee-jerk. The US dollar has sold-off and US yields are volatile while US stocks rally. The outcome of the data was mixed but the Unemployment came in at 3.7% vs. 3.5% expected and Average Hourly Earnings missed the mark as well, at 0.3% month on month vs. 0.4% expected. This data, behind the headline beat of 315k vs. 300k expected, is less inflationary and therefore the market initially dialled down its expectations of a 75 basis point hike from the Federal Reserve at the next meeting later this month. In this regard, however, it is worth noting that the Participation Rate was higher, potentially explaining the higher Unemployment Rate.
Payrolls have continued to advance strongly in August, but at a more moderate pace following the eye-popping 528k increase registered in July, which was a five-month high. Wage growth has slowed modestly after registering an unexpected 0.5% jump last month, nevertheless, Fed swap pricing of the terminal cycle rate has dropped to around 3.91%. The 2-year Treasury yield has fallen on the data within a 3.518%-3.449% range but is down 1.28% on the day so far. However, fed funds futures traders are still pricing in a September rate hike of 75 basis points after the jobs report which may limit the fall in yields, the greenback and put a cap on the yellow metal.
Prior to the data, the US dollar was headed for its third weekly gain in a row and was near two-decade highs against other major currencies, as measured by the DXY which tracks the currency against six counterparts. The US currency has been on the front foot since Federal Reserve Chair Jerome Powell said at the Jackson Hole symposium in Wyoming a week ago that rates would need to be high “for some time” to combat inflation. The index rallied to a fresh 20-year high on Thursday of 109.99, bolstered by robust U.S. data showing a fall in unemployment claims. Despite the data, DXY is still on track for a 0.5% weekly gain on a closing basis.
After all, Fedspeak has successfully catalyzed a repricing in rates markets, which have now largely priced-out odds that rate cuts will immediately follow the rate hiking cycle, as analysts at TD Securities noted.
”This leaves current pricing for rates near-fair, which suggests that the catalyst for the move lower in precious metals pricing is now fundamentally running out of steam. Notwithstanding, with every tick lower in gold prices, we continue to see odds of a major capitulation event growing, which could coincide with a break below a multi-decade uptrend in the yellow metal near $1675/oz.”
OPEC+ likely to roll over quotas at next week’s meeting but could mull cut – report
- It’s cut or hold for OPEC
OPEC+ is likely to keep output unchanged for October, according to three sources cited by Rueters. However some of the sources wouldn’t rule out a cut.
I think OPEC members like $100 oil and will try some jawboning after next week’s meeting rather than taking action. They will also be waiting for news on any Iran deal, which looks less likely today.
EU News
It was a good day for European stocks but US ETFs indicate it’s all gone now
- European equity ETFs give it all back
European stocks had one of their best days in awhile today, closing with gains of:
- Stoxx 600 +2.0%
- German DAX +3.3%
- FTSE 100 +2.3%
- French CAC +2.3%
- Italy MIB +2.9%
- Spain IBEX +1.6%
You can pretty much kiss all those goodbye. The VGK ETF tracks the Stoxx 600 and it’s now down 0.5% on the day with a huge reversal coming after the Nord Stream 1 news.
Other News
Transport of gas to Nord Stream pipeline has been completely stopped due to a leakage
- That may delay the reopening
Gazprom says the transport of gas to Nord Stream 1 pipeline has been completely stopped due to leakage found during their routine maintenance.
- The gas turbine cannot run safely given the damage
The pipeline was expected to reopen on a Saturday but it is now unsure whether that will take place.
Cryptocurrency News
Ethereum Price: Whatever happened to the 200 Week Moving Average?
- Ethereum price hovers 20% above the 200 Week Moving Average.
- A retest of the historical barrier has not yet occurred.
- A successful retest and rally signal could send the ETH price as high as $2,800.
Conversations have all but disappeared surrounding the historical technical indicator that was on every crypto newsfeed this summer. This article aims to reignite the conversation about the 200 Week Moving Average (WMA) as the Ethereum price will need a stable floor to land on before another bull run can occur.