Payrolls Top All Estimates
US job growth last month topped all estimates with unemployment rate declining and wage growth accelerating – possibilities of another jumbo cut by the Fed in November are greatly reduced
- Nonfarm payrolls for September +254k (vs. 150k expected), biggest gain in 6 months unemployment rate fell to 4.1% (4.2% expected)
- Report increases conviction that demand for workers is still healthy and layoffs are low Stronger case for soft landing scenario
- Traders have now priced out the chance of a 50bp cut in November – 25bp now expected
- Next up will be September CPI on Thursday, seen rising by 0.1% compared to August– smallest gain in last three months
Germany may be in a recession?
Germany’s economy unexpectedly shrank in the second quarter even as other euro-area countries expanded:
Source: PKB elaborations on Bloomberg data
Industrial production has yet to see a sustained recovery, plagued by weak global demand, high energy prices and tight financing conditions.
With inflation on the right track and softer-than-expected economic data, the ECB is widely expected to lower borrowing costs for a third time this year at the meeting in Slovenia.
US Q3 Earnings season preview
- The Q3 earnings season in the US will still see positive earnings growth for the S&P500 (4.2% y/y)
- Q3 earnings have been revised down during the last 3 months, while 2025E have been revised up
- Early reports show good results with a beat so far…
- …while the US economic surprise index points to a lower aggregate beat for the S&P 500.
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