Daily Market Commentary 11th July 2022

US Non Farm Payrolls beat expectations, adding 372,000 jobs, but these were lowered ambitions. Employment growth, is restoration of pre-COVID jobs, rather than actual added jobs growth. The Labour market is heavily reduced from pre-COVID levels, with Unemployment numbers heavily disguised with alternate welfare payments. US Bond Yields continue to toy with inversion of the yield curve, confirming the recession and triggering speculation, to the depth of the recession. Debt and deficit levels are far greater than the pre-GFC levels and at more than critical debt/GDP levels. This is what has prevented the ECB from raising interest rates, as debt servicing becomes prohibitive, in many member States. Inflation is destroying European economies but largely ignored by the ECB and European Commission.

European inflation levels are at record levels and the currency hovers at 20 year lows, while record US inflation is expected to top previous record highs in the coming week. The Fed has confirmed the commitment to beating inflation, which has given markets some solace, but further disruptions are anon. The EUR traded below 1.0100 and now may well test parity, while the GBP recovers to trade 1.2040.

Recession and lower demand have allowed commodity demand to slow, but this is perception, as sanctions continue to boost energy and food prices. Supply restrictions ensure the energy crises in Europe, will only accelerate, into the winter season. Inflation and growth remain key market indicators.

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