Börse & Märkte

Stocks Struggle, Bonds Rise/Yields Ease

Equities struggling Friday, flipping between small gains and losses as Syria tensions and US nonfarm payrolls influence price-action. Potential Fed tapering dominates the narrative with investors looking to the US monthly jobs report as the crucial tell-tale indicator to second guess the Fed’s possible move at the September policy meeting.

 

Core government bonds back in favour on risk aversion ensues across financial markets. Yields on UK gilts and German bunds ease as result, a day after the 10-year UK gilt yield touched 3%, a 25-month high and the German 10-year yield rose to 2%, a level not seen since March 2012. US Treasury yields also rose Thursday with the 10-year breaking above 3%, the first time since July 2011.

 

Oil prices edged up a tad as G-20 leaders fail to make head-way on reaching consensus on Syria with the US and Russia on opposing ends of the argument. Little to suggest reconciliation will be found with markets now expecting US Congress to sign off a strike on Syria early next week when the house reconvenes.

 

Data from UK, France and Germany all a mixed bag – UK ends its winning streak of stunning economic data as industrial output misses forecasts, remaining flat on the month versus expectations for a rise of 0.1%. Manufacturing activity rose just 0.2% on the month, versus expectations of 0.3% and UK trade deficit widens to £9.9billion, higher than market expectations as exports slumped in July.

 

Over in France, consumer confidence rose to 84 from 82 in July, a touch above market estimates while in Germany, exports fell 1.1% on the month, much worse than the 0.8% gain expected by the market. Damp data fails to excite the market which is currently too concerned with US jobs data out in the next few hours. ADP yesterday was weaker than forecast but jobless claims were better than anticipated – mixed signals leaving us feeling none the wiser over today’s possible outcome.

 

This time around, it should be an easy read; estimates are for 180k jobs to be added by the US in August – a number slightly below, in line, slightly above, modestly higher or exceedingly and outrageously phenomenal will all cement the case for Fed tapering in September in the eyes of the market. We will need to get a real ugly figure below 140k or so for the market to think otherwise. Unemployment rate would also need to drop to 7.3% to 7.2% before the market is completely convinced the Fed will scale back asset purchases.