Market Perspectives
The U.S. economy shed jobs in July for the first time in months and equities had their strongest week since April on the news, because a weak labour market is the fastest route to the Fed not hiking in September. July payrolls fell by 23,000 against expectations of 80,000 to 95,000 gains, while the unemployment rate fell to 4.1%. The S&P 500 closed at a record 7,757.64, up 3.6% on the week; the Nasdaq gained 5.2% and the Dow 3.0%. Europe's STOXX Europe 600 finished at 660.25, a fourth consecutive record close, with second-quarter earnings growth on track for more than 22%, the strongest since 2022. The problem is what rallied alongside them: gold rose about 7% in the same week, which is not what happens when a market believes inflation is beaten, but what happens when a market believes the central bank will stop tightening before inflation is.
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BONDS & MACROECONOMICS
Odds of a September rate increase dropped to 44% from around two in three, the ten-year fell to 4.657%, down almost nine basis points on the week, and the thirty-year came back to 5.206% from the 5.27% nineteen-year high set in July.
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