- Jobs report falls short; stocks lower. U.S. equities are tracking lower with global markets this morning as the highly anticipated nonfarm payrolls report, though strong, failed to meet consensus. Major indexes finished mixed yesterday in a muted session as only materials (0.8%) moved more than half a percent. Stocks in Asia fell modestly ahead of the U.S. payrolls report, with both the Hang Seng and Nikkei closing lower by 0.4% and 0.2%, respectively. The real headline overnight was the pound, which fell more than 6% against the dollar at one point, but has now recaptured more than half that loss; European markets are mostly lower amid the volatility, with the exception of the U.K.’s FTSE, up 0.9% as investors expect firms in the country to benefit from a weaker currency. Treasuries are showing modest gains as the yield on the 10-year note has fallen to 1.74%, gold is up 0.4%, and oil is lower but holding above $50/barrel.
- Job creation slows but still strong enough to keep Fed on track. The economy added 156,000 jobs in September, a small deceleration from August’s upwardly revised 167,000 (initially reported at 151,000). Taking into account the upward revision, the report was largely in-line with consensus. The unemployment rate ticked up to 5.0%, but for the right reason as more workers joined the labor force, while hourly wages accelerated to 0.2% month over month from August’s 0.1%. The U.S. economy has created 178,000 jobs per month so far in 2016, below the 240,000 per month average in 2014 and 2015, but more than enough to tighten the labor market and push up wages, keeping the Federal Reserve Bank (Fed) on track to raise rates in late 2016 or early 2017.
- Pound sterling has a flash crash. Last night, the sterling crashed more than 6% in a matter of seconds during early Asian trading. It has since rebounded sharply, but is still off more than 2% this morning. This comes on the heels of significant weakness earlier this week as well. The big question is what caused the 6% crash in a few seconds? The computers and algorithms take most of the blame; rumors of a “fat finger” trade are floating out there also. At the same time, the chance of a “hard” Brexit continues to gain momentum. Comments from French President Hollande pushing for a hard exit were cited as another potential reason for the volatility. A hard Brexit means the U.K. must incur greater consequences for leaving the EU. For more on our thoughts on a hard versus soft Brexit, be sure to read this blog post from earlier this week.
- Week ahead. Markets will be open on Monday for the Columbus Day holiday. Highlights for the week include the release of the minutes from the Fed’s September policy meeting on Wednesday and retail sales data on Friday. We will also be getting reports on small business sentiment on Tuesday, labor market conditions on Wednesday with the Job Opening and Labor Turnover Survey (JOLTS), and the University of Michigan’s Consumer Sentiment survey on Friday. There’s a busy lineup of Fed speakers throughout the week, highlighted by Fed Chair Janet Yellen’s keynote address at the Boston Fed on Friday. International data include loan growth and trade data from China, business sentiment in Germany, and retail sales and machinery orders from Japan.
- IMF/World Bank Fall meetings in Washington, DC
- IMF/World Bank Fall meetings in Washington, DC
Click Here for our detailed Weekly Economic Calendar
Past performance is no guarantee of future results.
The economic forecasts set forth in the presentation may not develop as predicted.
The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
Stock investing involves risk including loss of principal.
Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.
Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better.
Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk.
Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.
Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards.
High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors.
Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply.
Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained.
Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.
Technical Analysis is a methodology for evaluating securities based on statistics generated by market activity, such as past prices, volume and momentum, and is not intended to be used as the sole mechanism for trading decisions. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns and trends. Technical analysis carries inherent risk, chief amongst which is that past performance is not indicative of future results. Technical Analysis should be used in conjunction with Fundamental Analysis within the decision making process and shall include but not be limited to the following considerations: investment thesis, suitability, expected time horizon, and operational factors, such as trading costs are examples.
This research material has been prepared by LPL Financial LLC.
To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.
Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit
Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor
Tracking # 1-543249