The all important Non-Farm Payroll number blew away expectation of around 250,000, adding 528,000 jobs, for the month! An extraordinary blowout confirming the labour market resists the recession. The markets did not welcome the good news, with equities flat-lining, upon the release of the data. The argument is that the Fed will see the strong labour market and this will ‘green-light’ further aggressive rate rises, in an effort to combat the runaway inflation.
The RBA monetary policy statement indicated that further rate rises are on the way and expected the labour market to remain tight. The Central Bank forecast continuing falls in house prices and disposable income. The European economies are suffering a massive energy crises, with no end in sight, as the sanctions prevent access to cheap oil and gas. British interest rates are rising fast to combat rampant inflation (9.1%), which is forecast to rise above 13%, by the end of the year. This problem is shared across Europe and is causing extreme pain, as cost-of-living spirals and threats of energy restrictions become a reality.
This coming week will focus on inflation in Europe and the US, as key data is released, and is expected to show a slowing rate of growth. This will lead to speculation over Central Bank actions and interest rates.