Daily Market Commentary 7th October 2022

Global equity markets turned sour overnight, following the recent strong resurgence in equities, ahead of the all-important Non-Farm Payrolls number, to be released today. Expectations are around 250,000 jobs will be added, but the Challenger Jobs Report pointed to a sharp increase in job cuts in the economy (increase of 46%), while Weekly Jobless Claims were slightly higher. A strong labour market has allowed the Fed to embark of the very strong war on inflation, through sharp rises in the Fed’s fund rate, but it would take a massive miss on the NFP’s to warrant the Fed reconsidering it’s monetary policy strategy.

US and UK Bond Yields continued to rise, as did the recovery in the USD, with the EUR falling back below 0.9800, while the GBP crashed back below 1.1200. German Factory orders contracted 2.4%, while EU Retail Sales fell by 2%, as European industrial production crashes due to the energy supply and cost. The energy crises also destroys consumer demand, as energy prices destroy disposable income. A deep recession will hurt global demand and the commodity currencies reflected that, with the AUD dipping below 0.6400, while the NZD plunged to 0.5650.

All eyes are on New York trade tonight and the release of Non Farm Payrolls, but it will take a massive surprise on either side of expectations, to make a difference to Central Bank policy.