Fastbull : August 5th Financial News

[Quick Facts]

1. U.S. job growth slows, with the unemployment rate rising.

2. U.S. President Biden acknowledges slower job growth.

3. Goolsbee says the Fed won't overreact to one month's numbers.

4. Yen hits 7-month highs as U.S. slowdown fears carry over.

5. Fed's Barkin says he won't prejudge what to do at next meeting.

6. Iran will launch swift and heavy retaliation against Israel.

[News Details]

U.S. job growth slows, with the unemployment rate rising

U.S. seasonally adjusted nonfarm payrolls increased by 114,000 in July, with the previous two months' figures revised downward. The unemployment rate unexpectedly rose for the fourth consecutive month to 4.3%, indicating the labor market is cooling faster than other data suggests. This raises concerns about worsening job conditions and the potential for an economic recession. During the employment survey period, Hurricane Beryl disrupted power in Texas, possibly contributing to the lower-than-expected job growth. Average hourly earnings increased by 0.2% last month after a 0.3% rise in June. The market now anticipates a Fed rate cut in September, with a 75% chance of a 50 basis points cut.

U.S. President Biden acknowledges slower job growth

U.S. President Joe Biden commented on the July nonfarm payrolls report last Friday, stating that nearly 16 million jobs have been created since he and Vice President Harris took office, and the average unemployment rate is lower than any administration in the past 50 years. Employment is growing more gradually at a time when inflation has declined significantly. Business investment remains strong thanks in part to our investing in America agenda, which is creating good-paying jobs in communities that have been left behind.

Goolsbee says the Fed won't overreact to one month's numbers

Following the weaker-than-expected nonfarm payrolls report, Federal Reserve Bank of Chicago President Austan Goolsbee said it's the Fed's job to figure out the "through line" of the data and move in a "steady" way. Still, he noted if rates stay restrictive too long, policymakers have to think about the employment side of the mandate. If unemployment is going to go up higher than the neutral rate, that is exactly the kind of pinching on the other side of the mandate that the Fed has to think about and respond to. Economic conditions will determine the timing and size of rate reductions. But "when conditions warrant a cut, they tend not to be one individual cut."

Yen hits 7-month highs as U.S. slowdown fears carry over

Japan's yen hit mid-January highs against the dollar at Asia open on Monday, as markets extended moves triggered last week after weak U.S. employment data sparked recession fears and heightened expectations for more significant Fed rate cuts. Moreover, weak earnings reports from major tech companies have led to sharp declines in global stocks, oil prices, and high-yielding currencies as investors sought the safety of cash. The sell-off continued on Monday, pushing U.S. Treasury yields lower and stock indices down.

Fed's Barkin says he won't prejudge what to do at next meeting

Shortly after the nonfarm payrolls data release, Richmond Fed President Tom Barkin noted that the U.S. economy is in good shape, though it's unclear whether the labor market is getting back to normal rates of hiring or more seriously deteriorating. There's a difference between the two, which affects whether the unemployment rate will stabilize or increase.

Barkin doesn't plan to adjust his monetary policy outlook or prejudge what to do at the next meeting. The Fed will receive extensive data, including two employment reports, two inflation reports and many other economic indicators, before the September meeting to make the best decision.

Inflation is normalizing, and the key issue is how the labor market will perform in the future. How long does a low-hiring and low-firing environment persist? The U.S. job market remains robust by most measures, and the July rise in the unemployment rate was "fairly normal" by historical standards. The unemployment rate remains low. "We've been through two years, two and a half years of very frothy labor markets," Barkin said, "and so we're headed back down toward normal."

Iran will launch swift and heavy retaliation against Israel

According to The Wall Street Journal, an Iranian diplomat said attempts by various countries to convince Tehran not to escalate had been and would be fruitless given Israel's recent attacks, and Iran will carry out a swift and heavy response. "There is no point. Israel crossed all the red lines," the diplomat said. "Our response will be swift and heavy." The source mentioned that both Iran and Hezbollah in Lebanon believe the response should be stronger than April's shelling. Hezbollah indicated that the retaliation might involve a series of actions rather than a single attack.

[Today's Focus]

UTC+8 22:00 U.S. ISM Non-Manufacturing PMI (Jul)

UTC+8 20:30 Chicago Fed President Goolsbee's Interview with CNBC

UTC+8 05:00 San Francisco Fed President Mary Daly Speaks