General Market Analysis 09/06/23

Markets Rally After Jobs Numbers – Nasdaq Up 1%

US stocks rallied strongly yesterday after weekly jobs numbers showed a slowing in the economy with the market looking at a Fed pause next week. The weekly unemployment claims rose to 261k, 25k more than expected. The Dow finished up 0.5%, the S&P up 0.62% and the Nasdaq rose 1.02%. The S&P is now up over 20% since its October low with some market participants now calling a new bull market. US treasury yields dropped off with the 2-year dropping 2.9 basis points and the benchmark 10-year sliding 6.8 basis points. The dollar took a hit against most of the majors except for the Cad after the Bank of Canada surprised with another rate hike.

Fed in Focus for Next Week

Investors are looking at a busy week ahead with the FOMC’s focus on most players’ calendars. The market is now pricing in a 72% chance of a pause from the Fed next Wednesday, this is down from 85% a month ago. US stock markets are rallying but if the Fed was to push the button one more time, then we could see a sharp correction across markets. US CPI numbers are due out on Tuesday with the expectation that the year-on-year number will drop to 4.2% but if this disappoints then we could see the dollar push higher ahead of the rate announcement.

Chinese Data in Focus Today

Investors will be looking closely at key Chinese data due out today with both the CPI and PPI numbers due for release early in the day Beijing time. The expectation is for the CPI print to come in up 0.2% with a 4.3% decrease expected for the PPI number. Traders are hoping for signs that the world’s second-biggest economy will show signs of renewed strength to keep sentiment positive into the last trading day of the week. There is little out on the data calendar in the European time zone, but investor focus will once again be north of the US border with employment data due out in Canada with the unemployment rate expected to rise to 5.1%.


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