Awaiting U.S. Monthly Labor Situation Report

July 2, 2021

Amid lessening restrictions on travel, U.S. investors are anxious to get away for the long Independence Day weekend but first must get past today’s release of June jobs data. A larger employment increase than seen in April or May is anticipated along with a further dip of the jobless rate, which was 5.8% in the prior month. But markets are apt to be most influenced by average hourly earnings in light of signs that the pace of asset purchases by the Fed may begin to be tapered sooner than assumed previously.

U.S. and Canadian trade figures will also be released this morning.

In the meantime, there have been scant overnight developments from a data-release or market movement standpoint.

The weighted dollar ticked up less than 0.1% and shows gains of 0.4% versus the Turkish lira, 0.2% relative to the euro and yuan, and 0.1% vis-a-vis the Australian dollar, kiwi and sterling. The dollar is flat against the Swiss franc and down 0.2% versus the loonie and 0.1% against the Mexican peso and Japanese yen.

There have been sizable drops in 10-year European sovereign debt yields, including four basis points in Germany and Great Britain and of three basis points in France, Italy and Spain. The 10-year U.S. Treasury yield settled back two basis points, but its Japanese counterpart is unchanged from Thursday’s closing level.

Share prices fell 2.0% in China and 1.8% in Hong Kong but appreciated 0.6% today in Australia and by 0.3% in Japan, Indonesia and India. The German Dax is up 0.3%, too, while the Paris Cac, British Ftse, and U.S. stock futures show little net change so far.

The price of gold firmed 0.5%; that of WTI oil is down 0.1%.

Producer prices in the euro area jumped another 1.3% in May, lifting their 12-month increase by a full two percentage points further to a 4-decade high of 9.6%. Energy prices, which had dropped 4.8% in the year through May 2020, shot up 25.1% in the ensuing twelve months, and all other prices in the PPI collectively rose 4.9% on year.

South Korean consumer prices dipped 0.1% last month, marking their first monthly decline since November. From a 45-month high of 2.6%, the year-on-year rate of inflation settled back to a two-month low of 2.4% in June.

Annual growth in Japan’s monetary base, the monetary aggregate over which central bank policies exert their most direct control, slowed to 19.1% in June from 22.4% in May and 24.3% in April. Average growth in the MB averaged 21.9% last quarter, up from 19.8% in 1Q 2021, 9.1% in 2020, and 3.6% in 2019.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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