Market Musings 061024: A Payroll Present

Market Musings 061024: A Payroll PresentSummary:US recession fears calmed by surprisingly strong US non-farm payroll report on FridaySharp reaction in US bond yields, the 10-year Treasury yield rising to 4.0%Israel-Iran missile strikes raise tensions, oil prices as geopolitical risk premium risesUS infrastructure spending continues to be a strong investment themeTin, Copper and Industrial Metals generally get China stimulus-related boostQuestion marks over the speed and depth of the decline in the US economy have led several commentators to forecast recession (a prolonged period of economic contraction) in the year ahead. Key to this was the rise in the US unemployment rate, which has climbed from a mid-2023 low of 3.4% to 4.3% as of July. Employment is a classic late-cycle economic indicator - and if employment were to fall, then consumption would also suffer and recession would follow.

Friday’s non-farm payroll data for September was therefore a closely-watched report, with economists forecasting on average a gain of 140,000 jobs in the month. In the end, the September non-farm payrolls rose by 254,000, far better than the forecast of even the most optimistic economists. The payroll numbers...