The November US labour market data came in stronger than expected with the unemployment rate moving down from 3.9 per cent in October to 3.7pc in November 2023.
Total monthly non-farm employment increased by 199,000 with most of the job gains in healthcare and government while increasing employment was also observed in manufacturing as workers return from strikes.
Total monthly non-farm employment increased by 199,000 with most of the job gains in healthcare and government while increasing employment was also observed in manufacturing as workers return from strikes.- Christopher Hindmarsh, JBWere Limited
After the release of the payroll data, US two-year bond yield closed the week higher from 4.58pc on Thursday to 4.72pc on Friday last week.
Over the same time, US 10-year bond yield followed a similar upward trend and increased from 4.14pc to 4.23pc.
Given the strong resilience in the labour force, the market is pricing in a lesser chance of a rate cut in the first quarter of 2024.
The S&P 500 and NASDAQ 100 managed to close the week with a small gain of 0.41pc and 0.47pc, respectively, on Friday.
The gains were mainly driven by higher oil prices after the news that the US intends to refill its strategic petroleum reserve.
On Saturday, China released its consumer price index (CPI) which fell 0.5pc year-on-year, representing the steepest drop in three years.
The Producer Price Index (PPI) also decreased by 3pc year-on-year, higher than the forecast 2.8pc drop.
Some argue the deflationary risk will only be temporary as the data was impacted by the volatilities in food and energy prices and the core CPI (which excludes food and energy price fluctuations) remained consistent to prior months and rose 0.6pc year-on-year.
In Australia, household consumption remained flat in quarter three despite the rising interest rates, taxes and inflation. Wage and labour costs growth continued as total wage income per employee rose 1.9pc quarter-to-quarter and 5.2pc higher year-on-year.
Productivity had a small rebound in Q3 as GDP per hour worked increased 0.8pc quarter-to-quarter.
However, the positive change is still below the RBA's expectation of 1pc trend rate and will continue to be a point of concern for the RBA.
- This article does not take into account the investment objectives, financial situation or particular needs of any particular person. Before acting on any advice contained in this article, you should assess whether it is appropriate in light of your own financial circumstances or contact your financial adviser. Christopher Hindmarsh is an adviser at JBWere Limited. JBWere Limited AFSL 341162.