US labor report was a great source of comfort to markets - SocGen

Kit Juckes, Research Analyst at Societe Generale, suggests that the Friday’s US Labor Report was a great source of comfort to markets.

Key Quotes

“A 287k increase in jobs was far above expectations, but merely offsets the weakness of the previous month when NFP increased by 11k. The 3, 12 and 60 month averages are now 147k, 204k and 204k respectively, the annual percentage gain 1.7%. A slight slowing trend, but enough strength both to get unemployment lower and to be consistent with 2% GDP growth.

Wage growth edged up on base effects to 2.6% and there too there’s a clear, but very modest, upward trend. If the FOMC had an innate hawkish bias, this might prompt action but this is a cautious FOMC and what the data really do, is reduce the risk of the global economy imminently slowing to stalling speed, without raising the threat of imminent monetary tightening. Ideal, in the short-term, for risk sentiment as was reflects in super-low treasury yields co-existing with a test of the highs by the S&P. This week will probably see a tug of war between equities and bonds, but the winners may be higher-yielding assets and currencies.”