SLOWER JOB CREATION
In October, job creation in the United States significantly slowed, marked by an increase of only 12,000 nonfarm payrolls, below expectations and the weakest since late 2020. The overall employment picture was marred by storms in the Southeast and a labor impasse. The Bureau of Labor Statistics reported that the unemployment rate remained steady at 4.1%, with a broader measure of unemployment also unchanged at 7.7%. The report highlighted the impact of a Boeing strike and hurricanes, which contributed to job losses in the manufacturing sector. And although average hourly earnings slightly increased, the overall job market saw downward revisions from previous months, with sectors like health care and government showing gains while others, such as manufacturing and temporary help services, saw declines. Following these results, U.S. Treasury yields dipped, with the 10-year Treasury yield decreasing to 4.253%, while the 2-year yield also showed a decline of 4.096% as analysts believe the Federal Reserve may continue its easing cycle at the upcoming meeting due to the weak job data.
RISE DUE TO TENSIONS
Oil prices have increased after reports of heightened tensions in the Middle East, specifically with Iran potentially planning a strike on Israel from Iraqi territory. Brent crude futures surged by 2.6% to $74.68 a barrel, while U.S. crude futures increased by 2.7% to $71.16. Israeli intelligence sources suggest the attack could involve drones and ballistic missiles and may occur before the U.S. presidential election. Additionally, OPEC+ members are considering delaying a planned oil production increase in December due to concerns about soft demand and increased supply. However, it is worth noting that despite attempts at recovery, oil prices are expected to end the week with more than a 1% decline after a significant drop earlier in the week. Yet, analysts anticipate prices may rebound to around $71.80 before global attention shifts to events such as the U.S. election and upcoming meetings in China.
SHIFTING TREND
In the cryptocurrency industry, there has been a mix of contrasting developments as while Bitcoin had been on a strong uptrend the past few days and there is optimism surrounding the potential return of Donald Trump as a supporter of crypto, there are signs of a slowdown in interest in digital assets. This has led to job cuts at major companies like Kraken and Coinbase, signaling a shift in the market’s dynamics. Despite the success of Bitcoin and some other cryptocurrencies like Solana and Dogecoin, alternative coins such as Polkadot and Algorand have faced challenges. The sector’s overall health is being tested, as venture capital investment in digital assets has declined, and companies like Consensys are trimming their workforce. Moreover, regulatory uncertainties in the United States have added to the industry’s challenges, with a lack of clarity impacting operations and business strategies. Thus, as the industry navigates through these complexities, the future profitability and growth potential of digital assets remain uncertain.
MARKET UNCERTAINTY
According to Bank of America and Citibank, there is a divergence in views regarding the impact of a potential Donald Trump victory on the U.S. stock market. Bank of America’s prediction that a Trump win could lead to inflation and interest-rate hikes, creating a risk-off environment for stocks, contrasts with the common belief that Trump’s policies, such as lower corporate taxes, would benefit U.S. equities. Although the S&P 500 has been rallying recently due to Trump’s favor in betting markets, polls revealing a close race between Trump and Democratic candidate Kamala Harris have added uncertainty. Bank of America advises buying tech stocks if Harris wins, while Citibank recommends buying during any post-Harris election selloff with a split Congress. Additionally, Bank of America suggests that bonds may be a better investment than gold if government spending is reduced, and European stocks could benefit if tariffs lead to faster-than-expected rate cuts by the European Central Bank.
INTERNATIONAL NEWS
UK borrowing costs experienced a spike following the Labour government’s announcement of significant tax increases and higher borrowing in its budget presentation. This led to a rise in bond yields, indicating investor apprehension about the additional debt. The government’s objective is to achieve a balanced budget while making investments in public services and infrastructure. Economic analysts are forecasting a slight uptick in inflation and a slower rate of interest rate reductions as a result of these policy changes. While the budget is expected to offer some short-term growth benefits, its impact on long-term economic growth remains uncertain. Traders are closely monitoring how the government will allocate the additional funding, with concerns about fiscal responsibility. The fluctuation in UK borrowing costs has also impacted the value of the British pound, which has slightly weakened against the US dollar and euro as market participants navigate through the uncertainty surrounding the government’s fiscal decisions.
