03 July 2022 – The NFP Week

The past week was full of speeches and the market responded in a mixed fashion. However, the figures waited for the upcoming week will highlight if the global market will be in serious recession of just some rough time.

Furthermore, Bank of England, European Central Bank, and Federal Reserve all took part in a joint forum to discuss global inflation, monetary policy, and their views on the current economic outlook. The Head of the Federal Reserve made comments after the forum which gave confidence to the market regarding interest rates but also doubts regarding the economy.

In the U.S.

While the unemployment is expected to remain within the same rate at 3.6% the non-farm payroll is expected to decline by 15K to 275K. However, investors expect the unemployment claims to remain around the same figures at 230K.

On the other hand, while The Fed has lifted the policy rate by 150 basis points since March, with half of that coming last month in the central bank’s biggest hike since 1994. The market is betting on another of the same magnitude at the next meeting. Furthermore, FOMC meeting minutes are due to be released on Wednesday.

Powell advised that the Fed will not allow price increases to remain high in the longer term and expressed his hope that the regulator will be able to bring inflation closer to its target without significantly harming economic growth. The risk of a recession, according to Powell, is possible but also advised that high inflation would be a much lower risk in the longer term.

Eurozone and U.K.

The Eurozone also came under a lot of pressure this week with the currency seeing a 1% decline against its main competitors in less than 48 hours. The price witnessed pressure after the speech made by the ECB earlier this week. The market also slightly lost confidence in interest rate hikes as Germany confirmed a lower level of inflation.

However, according to economists, the general slowdown in inflation was triggered by the introduction of several new measures to support the population, in particular travel subsidies. This does not yet mean a significant reduction in inflationary pressure in the short term and interest rate hikes are still predicted for the coming months.

Major events during the Upcoming week.

Date		Event	Forecast	Previous
5-Jul	U.K.	BOE Gov Bailey Speaks
6-Jul	E.U.	EU Economic Forecasts
6-Jul	U.S.	JOLTS Job Openings	10.85M	11.40M
7-Jul	U.S.	ISM Services PMI	54.6	55.9
8-Jul	U.S.	FOMC Meeting Minutes
7-Jul	U.S.	ADP Non-Farm Employment Change	200K	128K
8-Jul	E.U.	ECB President Lagarde Speaks
8-Jul	U.S.	Unemployment Claims	230K	231K
9-Jul	U.S.	FOMC Member Bullard Speaks
8-Jul	U.S.	Average Hourly Earnings m/m	0.30%	0.30%
9-Jul	U.S.	Non-Farm Employment Change	275K	390K
10-Jul	U.S.	Unemployment Rate	3.60%	3.60%