August 11, 2020

Markets Today: No kick from JOLTs

The latest JOLTs (job openings) showed there are 5.9 million jobs available, more than expected, but it didn’t give markets any kick.

Today’s podcast

Overview: Slow hand

  • Soporific start to the week; no signs of progress on US fiscal front
  • Rotation out of ‘big tech’ into smaller caps and industrials gathers momentum
  • Limited FX moves but GBP and CAD benefit  from UK-EU trade deal hopes, higher oil prices respectively
  • NAB July Business Survey, weekly payroll numbers this morning


The European market inherited a soporific start to the week from the APAC region, the latter in part due to holidays in Japan and Singapore. So with much of Europe sweltering in temperatures of between 30 and 40 degrees Celsius, the invitation to do nothing was readily accepted. The US hasn’t done a lot either, save that rotation out of ‘big-tech’ into smaller cap stocks and industrials, already underway at the end of last week following announced US actions against Tik Tok and WeChat, has extended. The Nasdaq has ended Monday down by 0.4% while the Dow is up 1.3% and the Russell 2000 up 1%. The S&P finished +0.3%.

Currency market moves look to have been more order-driven than news-driven with no consistency across the G10 spectrum. AUD, NZD and EUR are all a touch softer so far this week, but so too is the CHF and to a lesser extent the JPY. Against this, GBP and CAD  are both a little firmer, the former seemingly on some positive mood music regarding chances of an EU-UK post-Brexit trade deal (courtesy of weekend missive from UK Cabinet Minister Michael Gove) and the latter on higher oil prices (WTI crude is up 2% to $42). Oil looks to have been boosted by weekend comments from  Saudi Aramco’s CEO, claiming crude demand in Asia is almost back to pre-COVID levels and that demand for energy will probably improve over the rest of the year.

Bond markets saw European yield 1-2bps lower but in the US Friday’s yield back up has extended, 10s up a further 1.5bps to 0.58%.

On the US fiscal front

No sign so far of any progress towards a deal this week that would obviate the need for legal challenges to President Trump’s four Executive orders signed on Saturday related to unemployment benefits, payroll taxes, tenant evictions and student loans. Failure to strike a deal by the weekend, that surely is now at least a 50:50 prospect, has potential to unsettle risk sentiment either side of the weekend.

On this

Chicago Fed President Charles Evans, who was speaking overnight but not on economic or monetary policy matters, was interviewed on CBS’s Face the Nation on Sunday night noting that it’s “incredibly important” the U.S. deliver another round of fiscal policy measures to aid the economy as it weathers the coronavirus pandemic. “Fiscal policy has been unbelievably important in supporting the economy  during the downturn that we’ve been experiencing. That continues to be important because we’ve not got control over the virus spread. I think that public confidence is really important, and another support package is really incredibly important,” Evans said.

Also from the Fed

Economists at the Federal Reserve Bank of New York on Monday published a report  saying that a ‘sizeable share’ of US publicly listed groups face a potential credit crunch, a slump in cash flow brought on by the pandemic squeezes companies with elevated levels of debt (FT reporting).

In geopolitical news

China announced tit-for-tat sanctions against 11 US officials including five members of Congress, following the similar action taken by the US over the weekend, though it doesn’t include any White House officials, underscoring the largely symbolic nature of the action. More pertinent is the meeting at the end of the week between key US and Chinese trade officials on a progress report on the phase 1 trade deal, though here the strong sense is that the Trump administration won’t want to jeopardise the deal this side of the election for fear of alienating the important mid-West farming constituency.    

On the Covid news front in the US

Florida and Arizona both posted their lowest total for new daily infections since early June, though California reported an above-average increase in new cases after fixing  glitch in the state’s data system.

The only piece of economic news of any note has been the US JOLTS (job opening) series, an old Janet Yellen favourite but which, benign for June, is too backward looking in current circumstances to be of much value. These rose to 5,889k, well above the 5,300k expected and 5,371k in May.

Coming up

  • NAB’s July Business Survey is at 11:30 AEST. In June, Conditions rose to 7 from 4 and Confidence fell to 0 from 2
  • AU Weekly payrolls and wages data (for the period ending July 25) will show how lockdown impacted jobs in Victoria, and provide an update on second-round jobs losses nationally. It’s likely to show big hits to Victorian employment in directly-impacted industries, such as hospitality and entertainment, which were just beginning to reopen in June. Also weekly consumer confidence.
  • Offshore we get latest UK labour market date, the German ZEW Survey (headline last at 59.3, expected to drop to 55.6), the US NFIB (small business) optimism survey (seen little changed at 100.4 from 100.6) and US producer prices.
  • China July credit and money supply data is are due anytime (they typically come out around APAC close, so likely tonight or tomorrow evening) ahead of the slug of monthly activity numbers on Friday.

Chart of the Day – NAB Business Survey

Market prices

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