The US$ traded lower on Friday, along with US yields (10Y; 2.825%), while stocks posted gains of 0.5%-0.9% following a mixed US Jobs report, which featured a higher than expected NFP figure, a higher unemployment rate due to the increased participation rate, and a slower than expected wage growth rate. The NFP report showed 213k growth in June, above expectation of 190k, while the previous month’s figure was revised up from 223k to 244k. The headline unemployment rate rose to 4.0%, up from 3.8% although this was largely due to the rise in the participation rate from 62.7% to 62.9%. Wage growth was a miss though as average hourly earnings rose 0.2% mm, down form the previous month’s 0.3%, and against expectation of 0.3% mm this month also.. Also from the US, the trade deficit narrowed slightly to USD -43.1 Bio in May. Friday also marked the start of the US trade tariffs, which were promptly met with retribution by China, as Beijing accused the US of triggering a large scale trade war. The market seems not to really know what to do with the headlines and consequently they had little immediate repercussions. This will play out to a greater degree over time I suspect.
The coming week will be busy, but probably dominated by political headlines relating to the increasing tensions in the escalating trade war. Monday will be a little thin, with little on the agenda apart from the EU Sentix Investor Confidence Survey. Tuesday will focus on the China CPI, the EU German/EU ZEW Economic Sentiment Survey and the UK May GDP figures (which for the first time will be published on a monthly, rather than quarterly basis), while Wednesday will look to the US PPI for guidance. Thursday will be the busiest day o the week, beginning with the German CPI/HICP and the ECB Monetary Policy Minutes from the last meeting and then to be followed by the US CPI figure for June. Friday will wind up with the China Trade Balance for June and then late in the day, the Preliminary Michigan Consumer Sentiment Index for July. There will also be plenty of Fed speakers throughout the week, along with other assorted central bankers. Note that a NATO meeting will take place mid-week, while Donald Trump will be in the UK on July 12/13, with trade likely to top the agenda and then will meet with Putin in Helsinki early next week.
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