The Empire Strikes Back
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What are the latest US job market numbers and how might they affect Fed rate‑cut expectations?
A falling unemployment rate in the United States. That's not what the Fed wants to see, so does that slow down the path of rate cuts even more? And today China retaliates on tariffs. So does Donald Trump up the ante? And perhaps talk about tariffs on other countries as well. We thought we might wait until uh April the first, but maybe not. It's Monday, it's the 10th of February 2025. It's the morning call from NAB. Good morning. Well, the US dollar is up over one hundred and eight on the DXY index. Uh that's how it finished the week. But the gradual rise we've seen since September seems to have stalled for now. The Aussie down slightly on Friday, down to sixty-two point seven US cents. The pound fell naught point three percent, the euro was uh down more than half percent on Friday.
And U.S. stocks well down. We got a one point four percent fall in the Nasdaq on Friday, almost one percent down for the Dow and the S P as well. Shares also. Also down in Europe, but not as much. Nort point six percent off the Eurostocks fifty, for example, and uh just not point three percent off the FTSE one hundred. Oil is higher, uh up half a percent on Friday for WTI and Brent. Brent now around seventy four seventy, which is pretty much slap bang in the middle of its fifty two week range. Uh bond yields lifted higher a bit on Friday, so ten year treasury is up six basis points to four point four nine percent. percent up twelve basis points in Canada for ten years. Uh only small moves in Europe though.
Uh Aussie ten years up four basis points on Friday to four point three five percent, now more like four point four two percent on futures. So a bit of a move up in Aussie bond yields since Friday. And uh a lot of that movement in bond yields on Friday in the US came from the non-farm payrolls.
How are China’s new tariff retaliations expected to impact global markets and US‑China trade tensions?
Let's look at that with NABS Taylor Nugent back again. So a hundred and forty three thousand new jobs in January, but the expectation was one hundred and seventy nine thousand, so undershooting on that. But the unemployment rate also declined. So uh less jobs than expected, less people unemployed. How's that work? Yeah.
Good morning, Phil. So there's a a bit of noise in the in the job starter. I think, you know, at a high level, certainly don't take too much from that small downside surprise on on payrolls in in the month, about 30k below expectations. We had upward revisions to um the last couple of months on on nets. Um and as we talked about on Friday, there was also kind of a lot of competing forces pulling it in in different directions. So I think you know, the the key message for from from the data overall is that it's a labor market that is reasonably healthy and looks reasonably stable through the through the end of twenty twenty four and into twenty twenty five. So that's, you know, consistent with the Fed's messaging in terms of kind of making sense of that slightly low and expected payrolls number and the the decline in the unemployment rate.
Key message with the US number is that these are different surveys. So you've got the the establishment survey which drives the payrolls results and then you've got the household survey Which is where those those ratios come from. Um, extra complication in January is some some benchmark revisions and and um revisions to population estimates that mean that even within the household survey, the unemployment rate one month to the next is is difficult to interpret. What we can say there is that, you know, the the one-tenth decline in the unemployment rate that was measured, that was actually despite some very marginal upward pressure. from the from those revisions and what that did to the the subsamples.
So, you know, this is reasonably resilient. And, you know, it's good news through the report. The other indicator that I point out as well that is encouraging is that the the prime age employment to population ratio, which had, you know, looked like it may was maybe pulling back from elevated levels into say November, that's increased in the last couple of months.
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Chapters
8 chapters
1
What are the latest US job market numbers and how might they affect Fed rate‑cut expectations?
0:01–1:39
2
How are China’s new tariff retaliations expected to impact global markets and US‑China trade tensions?
1:39–3:47
3
What did Taylor Nugent say about the health of the US labor market and its implications for monetary policy?
3:47–5:50
4
How are inflation expectations shifting after the latest University of Michigan consumer sentiment survey?
5:50–8:05
5
What are the potential consequences of President Trump’s hinted‑at reciprocal tariffs on Europe and other regions?
8:05–9:56
6
How will Jerome Powell’s upcoming parliamentary testimony address tariff impacts and inflation risks?
9:56–12:00
7
What do the recent Canadian unemployment data and German industrial production figures tell us about regional growth?
12:00–14:00
8
What key economic releases and central‑bank events should listeners watch for later this week?
14:00–15:09