NFPs came in under expectations in November

Daniel Richards - MENA Economist
Published Date: 06 December 2021


  • There was a net gain of 210,000 jobs in the US in November, according to the latest NFP report released on Friday. This missed consensus expectations for a further 560,000 jobs added, but could be revised higher in subsequent readings.  Nevertheless, the November figure was the lowest this year and the downside surprise underlines that the labour market’s recovery from the pandemic will remain uneven. This is likely to hold over December at least as well given the concerns over the new Omicron variant of Covid-19 which has now been reported in several US states and which Fed Chair Jerome Powell implicitly cautioned last week could impede the recovery. Nevertheless, as it stands the November jobs report was likely still good enough for the Fed to continue at its signposted pace of tapering and potentially even hasten this. The November household survey showed the headline unemployment rate fell to 4.2%, from 4.6% in October, there was a modest rise in the participation rate from 61.6% to 61.8%, and the proportion of prime age workers in employment rose to 78.8%, levels last seen prior to the pandemic.
  • Following its monthly meeting last week, OPEC+ has opted to maintain the pace of its increasing oil production by 400,000 b/d in January, as previously signaled, even as concerns over a resurgent Covid-19 pandemic heighted expectations that the producers’ group might slow down. However, the bloc’s communiqué did leave the door open to further adjustment, saying that it would ‘make immediate adjustments’ should the market conditions see a material change.
  • Turkish CPI inflation rose to 21.3% y/y in November, from 19.9% the previous month, exceeding expectations of 20.7%. The m/m pace of price growth was 3.5%. Meanwhile, the PPI inflation rate rose to 10.0% m/m and 54.6% y/y, which coupled with a precipitous depreciation in the lira in recent weeks could see headline CPI inflation move higher still in the coming months.
  • Saudi Arabia's Public Investment Fund has announced plans to sell shares to the value of as much as USD 3.1bn in Saudi Telecom. 100mn shares will be offered at SAR 100 to SAR 116 according to the stock exchange listing. PIF has been selling off some of its holdings in order to fund its investment plan.

Key Economic Data and Events This Week

  • Tuesday – Australia RBA cash rate target announcement. Forecast: 0.1%
  • Tuesday – Germany ZEW survey, expectations. Forecast: 25.0
  • Wednesday – US JOLTS job openings. Forecast: 10.5mn
  • Thursday – Egypt CPI inflation, % m/m.
  • Friday – US CPI inflation, % m/m. Forecast: 0.7%

Fixed Income

  • Benchmark government bonds rallied sharply last week as markets took fright as the prospect of the Omicron variant of Covid-19 spreading globally. An index of US Treasuries rallied 0.6% last week, its third consecutive weekly gain. The disappointing November jobs report also helped to push investors toward risk haven assets even as Fed chair Jerome Powell came out much more aggressive in his outlook for normalizing policy.
  • A more hawkish posture from Powell helped to sink short-term USTs with the 2yr yield adding almost 9bps last week to close out at 0.5873%, despite the anxiety around Omicron which played out much more on the longer-end of the curve. The 10yr UST yield fell 13bps over the course of the week with a 10bps drop on Friday alone and closing the week at 1.3430%.
  • Price action was similar in bund and gilt markets with the front-ends selling off while the longer-end bonds rallied; 10yr bund yields fell 5bps to -0.391% and the 10yr gilt dropped almost 8bps to close out at 0.7460%.
  • The drop in long-run UST yields had a mixed effect on emerging market local bonds as their exposure to the impacts of Omicron, if any, could be substantially higher. South African bonds actually rallied with the 10yr yield falling more than 30bps last week to 10.072%. However, Turkish 10yr government bond yields jumped 17bps to 20.27%, likely not helped by abrupt changes in leadership at the finance ministry while Indian 10yr yields rose 3bps to 6.361%.
  • Central bank action this week sees the RBA setting police on December 7th while the RBI will meet on the 8th. Elsewhere the Bank of Canada will set policy on December 8th as well.


  • While there were some wide intraday moves in FX markets the dollar index ended up closing the week relatively unchanged at 96.117. Hawkish commentary from Fed chair Jerome Powell appears to be balancing out the potentially negative impacts of the Omicron variant of Covid-19. With a busy outlook for central bank meetings in the next few weeks, currency markets may be locked in place until a clear outlook on policy and the virus materializes. EURUSD closed relatively unchanged at 1.1315 after some sharp gains at the end of the prior week. USDJPY moved in favour of the risk-haven yen and dropped 0.5% to close out at 112.80.
  • Riskier currencies sold off last week, however, with all commodity currencies dropping sharply. USDCAD rose 0.41% to settle at 1.2843 while AUD fell 1.7% to 0.7001 and NZD dropped 0.73% to 0.6772.


  • US equities came under concerted pressure at the close of the week as the NFP report gave rise to expectations for sooner monetary tightening, alongside concerns over the resurgent Covid-10 virus. Technology growth stocks are particularly vulnerable to this trend, and the tech-heavy NASDAQ lost -1.9% on Friday, leading to a w/w loss of -2.6%. The Dow Jones was the least affected by the latest buffeting, losing -0.9% over the week, while the S&P 500 dropped -1.2%.
  • In Europe, conditions were somewhat more positive as the previous week’s heightened concerns over the new Omicron variant tempered, enabling key indices to move back up. The UK’s FTSE 100 added 1.1% w/w, while France’s CAC gained 0.4%. The gains were not universal, however, with high case numbers in Germany weighing on the DAX, which lost a further -0.6% over the week.


  • After an enormous decline as news of Omicron hit markets, oil prices stabilized somewhat last week. Brent futures settled down 3.9% to USD 69.88/b while WTI fell 2.8% to USD 66.26/b. Not helping the near-term outlook, OPEC+ decided to carry out its 400k b/d production increase in January even as prices were rocked by the potential negative demand implications of Omicron. OPEC+ could switch policy abruptly if there is a noticeable impact on oil demand as a result of Omicron.
  • Last week showed more weakness to the argument that gold can be a risk haven as the yellow metal fell more than 1% to settle at USD 1,783/troy oz despite the myriad of risks affecting the market. Both silver and platinum fell also, by more than 2% each while palladium was the standout among precious metals, managing a 3% gain.

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