The US created less job than expected in August

During Jackson Hole meeting last week Federal Reserve Chair Jerome Powell said the central bank could begin reducing its monthly bond purchases this year, though it won’t be in a hurry to begin raising interest rates thereafter. The economy has now met the test of “substantial further progress” toward the Fed’s inflation objective that Powell and his colleagues said would be a precondition for tapering the bond-buying, while the labor market has also made “clear progress,” the Fed chief said Friday in a his speech to the Fed’s annual Jackson Hole symposium.

The US added 235,000 jobs in August as the economy appeared to struggle under the impact of rising coronavirus cases. The number of jobs created in August was the lowest since January, well below economists’ expectations of 750,000. The unemployment rate, meanwhile, fell to 5.2% from 5.4%. Yet, US rates surprisingly moved higher as investors felt that the August numbers alone would not change the direction of Fed monetary policy. A reduction in asset purchases before the end of the year therefore remains the most likely strategy for the Federal Reserve, but the announcement is likely to come in December rather than November. The 10-year Treasury yield ended the session at 1.322% on Friday.

In Europe, bond yields moved in line with their US counterparts. Investors are waiting to see if Christine Lagarde will announce any changes in monetary policy at the ECB meeting on Thursday.

Swiss GDP grew by 1.8% in the second quarter compared to a decline of 0.4% in the first quarter. This was slightly below expectations of 1.9%. On a yearly basis, the national GDP increased by 7.7% against expectations of 8.9%. Consumer prices rose by 0.2% in August and 0.9% over the year. Thanks to the lifting of restrictions, the service sector has regained momentum. The non-food and wholesale segments contributed strongly to the growth of trade after the reopening of shops.

Chinese Exports rose by 25.6% in August. Analysts were expecting a 17.1% increase after an increase of 19.3% in July. Imports, on the other hand, rose by 33.1%.

Yesterday after being under pressure since the employment figures, the dollar recovered against most currencies. This comes as the yield on the US 10-year bond yield rose to 1.37%. Gold was the first victim of this movement with a down $30 on the day and back below $1,800 per ounce.

The New York Stock Exchange ended mixed, with concerns about the economic recovery outweighing hopes that the Fed will continue to support the economy longer than expected. The Dow Jones index gave up -0.76%, or 269.09 points, to 35,100 points. The S&P-500 lost 15.4 points, or -0.34%, to 4,520.03 points. The Nasdaq Composite advanced 10.81 points, or 0.07 percent, to 15,374.33 points, supported by the big names in the technology sector. Apple gained 1.55% to $156.69, while Alphabet, gained 0.38% to $2,885.61 and Amazon, gained 0.90% to $3,509.29.

Oil prices edged higher overnight having fallen the previous two days. Now at Brent at 71.97 and crude at 68.69.

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