Friday’s US jobs report highlighted the ongoing resilience in the American economy which has continued to power ahead in the face of higher Federal Reserve (Fed) interest rates. 336,000 new jobs were created during September, nearly double economist expectations whilst the previous month’s data was also upgraded[1]. Last month, the Fed left rates unchanged at a target level of 5.25-5.50% although the ongoing strength of local economy has seen the ‘higher-for-longer’ narrative gather momentum with the jobs data providing additional fuel. Treasury yields continued to rise last week with the 10-year rising by a further 22 basis points (bps) to 4.80%.

Equity markets were mixed. The S&P500 added +0.5% which largely reflected strong gains made by several of the large cap technology companies which significantly outperformed the rest of the index. Weekly losses were seen in Europe where the MSCI Europe ex UK index and FTSE100 retreated by -1.1% and -1.5% respectively. Sovereign yields also rose in both regions with weak economic data an additional headwind. Meanwhile in Japan, the Nikkei 225 shed -2.7%. Chinese equity markets were closed for the Golden Week holiday celebrations.

Oil recorded its worst weekly decline for some time as concerns relating to future demand weighed on sentiment. Despite ongoing supply cuts by production giants Saudi Arabia and Russia, the surge in treasury yields and the negative impact that a higher-for-longer environment could have on the global economy hit prices last week. Brent Crude slumped by -11.3% to $84.65 a barrel although its worth noting that prices have spiked again this morning (Monday 9th October) following the Hamas attack in Israel over the weekend. Elsewhere in commodities, copper declined by -2.9% to $7,971 a tonne reflecting its own demand concerns whilst gold fell to -1.5% to $1,830 on the back of US Dollar strength.

Week Ahead

Source: Refinitiv Workspace, 09/10/23

[1] Bureau of Labor Statistics – Employment Situation Summary 06/10/23, 09/10/23

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