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It took the publication of the latest employment figures in the United States for the stock market to stop believing that the end of the rate hike is coming soon


No, the US economy is not in recession, or even on the verge of recession. Those who still had doubts certainly no longer have any since today and the publication by the Bureau of Labor Statistics of the employment report for the month of July, in which it appears that the world’s largest economy has created more 500,000 jobs last month “The unexpected acceleration in payroll growth in July, combined with the further drop in the unemployment rate and the resumption of wage pressure, ridicules claims that the economy is on the verge of recession”comments economist Michael Pearce, at Capital Economics.

528,000 non-agricultural jobs were created in the United States, twice as many as economists had anticipated. It is also beyond what the United States had accustomed the Stock Exchange to in recent months (an average of 457,000 per month over the first six months of the year). There, total employment has even returned to its level of February 2020, before the health crisis.

Job creations affected all sectors of the economy. They were particularly numerous in the leisure and hotel sectors (+96,000), business services (+89,000) and health care (+70,000). “There is no evidence that the slowdown in activity in the housing and manufacturing sectors is translating into weaker employment growth”notes Michael Pearce.

Again, the 0.75 point bearing on the table

Faced with a labor market also “hot”, according to the qualifier of the economist, the stock market’s dream scenario according to which the American central bank would soon stop raising interest rates (because inflation was starting to subside), and even lower them at the beginning of the year. next year has just been demolished, where the numerous declarations to this effect by several central bankers this week had done nothing. San Francisco Fed President Mary Daly said in particular that the work of the US central bank was ” far “ to be finished in the fight against inflation.

Once again, according to CME calculations based on derivatives on Fed Funds, debt market operators see the Fed raising its key rates by 75 basis points, within a range of 3 to 3.25% ( implied probability of almost 70%), and no longer just 50 basis points just before the publication of the statistic.

the Bedroom 40 lost 0.63% today and closed below the 6,500 point threshold, at 6,472.35 points, ahead of the publication next Wednesday of the US consumer price index for the month of July . Wage figures in the jobs report raise fears of self-sustaining inflation. In July, the average hourly wage increased more than expected, by 0.5% compared to June and by 5.2% year on year (4.9% expected by the consensus in July, after 5.1% the month previous).

Banks and TotalEnergies have benefited

On the bond market where, however, the month of August is reputed to be the best month of the year, sovereign debt rates have started to rise again (and therefore their price is falling). The yield on 10-year US bonds is up almost 20 basis points, to around 2.86%. Yields on debt securities with shorter maturities are also rising, but less sharply. The yield curve is steepening again as fears of recession in the world’s largest economy recede, which has benefited banks who do what is called maturity transformation: they borrow short-term to long-term lending.

The rate of ten-year debt securities in the United States suddenly jumped on the secondary debt market, to its highest level in two weeks.  The announcement of the contraction of the American GDP in the second quarter and the declarations of Jerome Powell, the head of the Fed, at the end of the last monetary policy meeting had created hope, on the stock market, that the rise in interest rates was nearing completion in the United States.  Jerome Powell said last week that “at some point it will be appropriate to slow down” as the Fed is starting to see signs of a cooling US economy
The rate of ten-year debt securities in the United States suddenly jumped on the secondary debt market, to its highest level in two weeks. The announcement of the contraction of the American GDP in the second quarter and the declarations of Jerome Powell, the head of the Fed, at the end of the last monetary policy meeting had created hope, on the stock market, that the rise in interest rates was nearing completion in the United States. Jerome Powell said last week that “at some point it will be appropriate to slow down” as the Fed begins to see signs of cooling in the US economy | Photo credits: FactSet

At the European level, the sector index for the profession gained almost 1%, the best performance just behind the index of companies in the “basic resources” sector (mining), and ahead of oil companies. In Paris, Agricultural credit gained another 2% on the Cac 40, after already a good rise yesterday, in the wake of the publication of its second quarter accounts, better than expected, thanks to record activity for the investment banking division (sales of hedging products for companies against variations in rates, currencies, raw materials).

Recession fears, particularly in England, where the country’s central bank has outright announced it for the end of the year, explain the 12% drop in oil prices this week. But even if the price of Brent from the North Sea remains, this Friday, below the threshold of 100 dollars per barrel, it has been rising since 2:30 p.m. exchange at nearly 96 dollars (+2% compared to yesterday).

TotalEnergiesdown most of the session, closing with a gain of 0.5%.




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