NFP report disappoints markets

By Naeem Aslam  

The US jobs number failed to bring a massive surprise on either side.

Non-farm payrolls rose by 187,000 in July, falling short of the market expectation of 200,000 and below the June increase of 209,000 that was revised lower to 185,000.

The downside surprise in the NFP report has made the tug-of-war between the bulls and bears even tougher, as neither of them knows which way the market is going to go.

In addition, there were also some mixed signals in the data point, which means that the Federal Reserve doesn’t really have the confidence to go and increase the interest rate in the way that they would have liked.

Fed rate hike cycle

The Fed increased the interest rate by another 25 basis points recently, and many believe that the Fed has reached the pinnacle of its rate hike cycle.

However, there are some who believe that there is still a lot of firepower left, and there are chances that the Fed may increase rates further as inflation continues to print a number that is much bigger than their own inflation target.

Once the dust has settled, the focus is going to be on the US CPI data, which in fact commands more importance among many traders.

Traders are highly likely to continue to live on the edge unless they see a clear downtrend in inflation, which is difficult to anticipate given an upswing in oil prices.

 

Naeem Aslam is Chief Investment Officer at Zaye Capital Markets.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Zaye Capital Markets.