Daily Market Commentary 11th October 2021

Non Farm Payroll data was a shocking miss to analysts, with only 194,000 jobs added to the US economy, as markets were expecting more the 500,000! This is a worrying trend, considering the mismatch between job openings and unemployed. The real Unemployment rate is much, much higher. The US administration has continued extended and elevated unemployment benefits, under the guise of Covid virus restrictions, but have succeeded in structural unemployment. The miss on NFP was not reflected in the equity markets, as this sent a signal to the Federal Reserve that they could continue the historically and extraordinary monetary expansionism, boosting liquidity and support for asset bubbles. The USD was softer, with the EUR rising to 1.1570, while the Yen hit 112.20!

The Non Farm Payrolls number undermined the reserve currency rally, with the AUD consolidating above 0.7300, while the NZD also held above 0.6900. The coming week will be focused on inflation and growth numbers. This is where the narrative lies, with inflation the only barrier to ‘modern monetary policy’. Central Banks have continued to buy government debt, allowing fiscal negligence/self-destruction, but inflation will be the quixotic economic saviour.

Markets will focus on CPI/Inflation numbers across Asia, Europe and the US, in the coming week.