ADP Non-Farm Surprises to Upside; Core Retail Sales in US Strong; ISM Manufacturing in US Also Strong; Trump States Iran “Asked for a Ceasefire”; Trump gives national address; Risk Appetite Returns
Summary: ADP Non-Farm Employment Change released yesterday, with Retail Sales figures and ISM Manufacturing PMI in the USA. Trump addressed the nation as well. Weekly Unemployment Claims are scheduled for today in the US as the sole major economic announcement.
- ADP Non-Farm Employment Change, Core Retail Sales, and ISM Manufacturing PMI numbers were released within the last 24 hours. All of these American numbers were stronger than anticipated. The main takeaways were:
- The ADP Non-Farm Employment Change numbers came out at 62,000 jobs added instead of the 41,000 expected, which could “raise the bar” for expectations on Friday for the BLS official Non-Farm Payroll Change numbers.
- Retail Sales and Core Retail Sales month-over-month were both hotter than anticipated. The Retail Sales number was 0.6%, better than the expected 0.5%. The Core Retail Sales number was 0.5%, better than the expected 0.3%. This shows that inflation could continue to be an issue as far as inflation is concerned. The Fed may have trouble cutting rates with spending still strong, and the Tuesday JOLTS result of 6.88 million jobs openings causing many to think that the economy will still see inflation.
- ISM Manufacturing PMI numbers coming out at 52.7, a touch hotter than the expected 52.3 reading, showing a potential inflationary headwind coming in the manufacturing sector.
- President Trump’s speech wasn’t really anything new, as he suggested that the conflict could over in a couple of weeks. The speech was far more benign than many had feared. However, the initial reaction was slightly bearish for risk appetite.
- The only economic announcement expected is the Weekly Unemployment Claims number in the United States, with the expectation of adding 212,000 people to the unemployment insurance rolls. This could influence the S&P 500 and other US indices, but with the geopolitical issues at the moment, the effects may not be as strong as usual.
- The war in the Middle East continues to be the primary focus for traders at the moment. The last session featured Trump stating that the “Iranians are asking for a ceasefire.” However, there has been some pushback on that from Tehran. This continues to move Crude Oil, as a commercial tanker was attacked, and fears of the Europeans running out of oil continues to plague that area.
- With the hint of peace, many markets such as DAX, CAC, and FTSE are all trying to turn things around after a rough few weeks. The Wednesday session was positive across the board, as it was the second green day in a row.
- Metals also rallied, although Gold was certainly favored. This can be laid firmly at the feet of interest rates in the US, as well as other countries, falling. This allows non-yielding assets such as Gold, Silver, and Platinum to breathe a bit after seeing so much trouble. Keep an eye on the US 10-year yield, as the 4.3% level is a “line in the sand.” A drop below there, as we had seen in early trading on Wednesday, could be positive for metals again.
- Speaking of the 10-year yield in America, it is back above the crucial 4.3% level in Asian trading. However, it has been shown that positive signs of peace progress can bring those back down. This is a major indicator of risk appetite in numerous markets.