Payrolls Underwhelm Markets, While China Boils OverStock-Markets / Financial Markets 2017 Jan 06, 2017 - 04:32 PM GMT
Short-term support helped to keep the SPX aloft yesterday. The futures markets have been waiting for the monthly payrolls report. Now that it is out, it appears to be less than satisfactory. The question is, will there be a new high, or do the equities markets sell off from here?
Bloomberg reports, “The U.S. labor market turned in a solid performance at the end of 2016, sending job gains above 2 million for a sixth year as paychecks rose by the most during the current expansion.
The 156,000 increase in December payrolls followed a 204,000 rise in November that was bigger than previously estimated, a Labor Department report showed Friday in Washington. The median forecast in a Bloomberg survey of economists called for a 175,000 advance. The jobless rate ticked up to 4.7 percent as the labor force grew, and wages rose 2.9 percent from December 2015.”
ZeroHedge digs a little deeper, “With Wall Street expecting a 178K payrolls print for president Obama's final full monthly December jobs report, the headline December nonfarm payrolls increase of just 156K is likely to disappoint. However, the poor December number will likely be offset by a revision to the November print from 178K to 204K, even as October was revised downward from 142K to 135K, for a net revision of the past two months to 19K higher.”
Bond investors apparently did not like the news, as yields jumped higher. It appears that Wave 4 of (3) may be complete. The target for Wave 5 of (3) is 27.00.
USD futures have bounced to challenge Intermediate-term resistance at 101.80. Chances are good that it may retrace to challenge its Cycle Top at 102.35, which is an approximate 42% retracement of the decline. That area would be an opportune time for a a short position on USD.
The Chinese Yuan is tumbling again after a short-lived short squeeze.
ZeroHedge reports, “While China's unprecedented currency moves have quickly become the main talking point across global markets which otherwise have started off 2017 in an eerily calm fashion, it is the sudden surge in two-way volatility that has emerged a major threat to global market stability.
Case in point, the offshore Yuan fell as much as 1.1% to 6.8623 a dollar in Hong Kong, the most in exactly one year, after a record 2.5% surge over the past two sessions. This took place as a result of conflicting signals, as on one hand China continued to drain liquidity and sent overnight deposit rates into all time high territory, yet on the other the PBOC raised its fixing less than projected, but still the most since 2005, and Goldman Sachs advised its clients that the best time to short the yuan are just after interventions - like the recent one - which flush out bearish positions, or when China concerns were off traders’ radar screens.”
The instability of the Chinese currency is going off the charts. There appears to be more instability to come. Will it spread to other markets?
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