10 October 2022
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US labour market remains resilient

By Khatija Haque

  • The gain in nonfarm payrolls in the US in September came in above expectations at 263,000, compared with 255,000. This was a slowdown from the 315,000 recorded the previous month and was the slowest pace of job gains since the 263,000 recorded in April 2021. Nevertheless, it illustrated ongoing resilience in the labour market in the face of the 300 bps of hikes implemented by the Fed thus far this year. Despite the slowdown in job gains, the unemployment rate ticked back down, from 3.7% to 3.5%, as the participation rate declined. With the number of job seekers falling once more, wage growth will remain high and potentially inflationary.
  • The labour market data makes a fourth 75bps hike at the November meeting a near certainty given the pushback already seen from a number of Fed officials last week about any prospect of a pivot after some disappointing economic data releases, and this has been reflected in the futures markets. This weighed on markets once more with notable losses in equity markets on Friday offsetting a strong start to the week. US CPI inflation is due on Thursday and is expected to have slowed to 8.1% y/y in September, from 8.3% the previous month. It would take a sizeable downside surprise to lead to any discussion around a smaller hike from the Fed.
  • Other key events to watch this week are the World Bank and IMF annual meetings in Washington, with the Bretton Woods institutions coming together at a time of greater global economic crisis than has been known for many years. Key data points include US retail sales and UK employment.
  • German industrial production disappointed as it declined -0.8% m/m, worse than the consensus projection of -0.5%. More positively, the previous month’s reading was revised up from -0.3% to flat growth, but with energy rationing on the cards Europe’s largest economy will continue to struggle through the final quarter of 2024, especially as price pressures remain salient – import prices surged 32.7% y/y in August (4.5% m/m) as gas prices quadrupled, the highest level since 1974. Retail sales meanwhile dropped -1.3% m/m.

 Today’s Economic Data and Events

  • US bond markets are closed today for a public holiday
  • No other notable data releases

Fixed Income

  • The stronger than expected September non-farm payrolls report in the US helped to push back against expectations of an early pivot from the Federal Reserve and pushed US Treasuries lower at the end of the week. The 2yr UST yield added 5bps to settle at 4.3078% while the 10yr added almost 6bps to 3.8814%. Markets are fully pricing in a 75bps hike at the early November FOMC meeting.
  • European bonds fell much more aggressively at the end of last week with 10yr bund yields up by 11bps to 2.189% and similar maturity Italian yields rising by 19bps to 4.688%. The outlook for the ECB remains for another 75bps hike at this month’s meeting as inflationary pressures remain high. Gilts also dropped with yields up by about 7bps to 4.223%.


  • The US dollar ended the week on a stronger footing, helped by rate hike expectations following the strong non-farm payrolls report. EURUSD fell by 0.48% on Friday to 0.9744 while GBPUSD pushed back to a 1.10 hand, down 0.68% on Friday. USDJPY closed nearly unchanged at 145.25.
  • Commodity currencies also came under pressure with AUDUSD down by 0.48% to 0.6375 and NZDUSD falling by 0.88% to 0.5611. USDCAD was relatively stable, closing nearly unchanged at 1.3739.


  • A strong start to the week meant that US equity markets remained in the green at close of session on Friday, despite the sizeable losses seen in the wake of the jobs report. Despite the Dow Jones, the S&P 500 and the NASDAQ losing -2.1%, -2.8% and -3.8% respectively on Friday, they managed to end the week up 2.0%, 1.5% and 0.7% respectively.
  • Asian markets enjoyed even greater w/w gains despite Friday losses, although they will see selling pressure on Monday as they follow the news out of the US. The Nikkei added 4.6% w/w and the Hang Seng 3.3%.
  • Gains were more modest in Europe, where losses on Friday offset earlier gains. The CAC added 1.8% w/w and the DAX 1.3%.
  • Locally, the DFM gained 1.0% w/w and the ADX 1.6%. In Saudi Arabia, Bloomberg has reported that utility firm Marafiq has seen its USD 897mn IPO fully covered in the latest high-profile listing from the GCC.


  • Oil prices had a strong week with Brent futures up by 11% to close at USD 97.92/b while WTI was up by more than 16% to USD 92.64/b, bolstered by the OPEC+ plan to cut output by 2m b/d for November-December this year and likely keep its ability to adjust production levels a ready instrument.
  • This week sees the release of monthly oil market reports from the IEA, OPEC and EIA, all of which may outline the effect of lower OPEC+ volumes on oil market balances going forward.

Click here for charts and tables

Written By

Khatija Haque Head of Research & Chief Economist

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Khatija Haque

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