Originally published by IG Markets
US stock markets rose Friday night as the June jobs report showed almost 50,000 more jobs created than expected. The unemployment rate ticked up 0.1% to 4.4% although this is more a function of a higher participation rate than a deterioration in hiring. The only weak point of the report was the fact that average hourly earnings were lower than expected as well as a downward revision to the prior month’s number. The major European markets had fairly quiet sessions with Germany’s DAX closing almost unchanged and the FTSE closing just slightly higher after trading down around 0.5% earlier in the session.
Gold had a weak session on Friday night and is now at an almost four-month low. The weakness in gold appears to correlate with global bond prices which closed lower last week. The US 10-year bond yield has climbed over 20 basis points in the past two weeks while the Australian 10-year bond yield climbed almost 40 basis points. Although bond yields have not exceeded their highs from earlier in the year, the trend at the moment is clearly up (yields rise as prices fall). European bonds are experiencing the same declines with the German 10-year bond now trading at a yield of 0.57% after being negative just one year ago and rising 31 basis points in the last month. The gold market is responding to the rise in yields as holding gold becomes less attractive as yields rise due to the fact it doesn’t pay interest.
The coming week is quiet in terms of economic data releases although the US will report its retail sales data on Friday night. The S&P/ASX 200 closed slightly down last week with Friday’s 1% decline erasing the gains made earlier in the week. ASX 200 futures are pointing to a slightly higher open.
Data releases:
- Chinese CPI 11:30am AEST