Home ›› 09 Aug 2022 ›› Stock
Markets were mixed Monday and the dollar held big gains as a blockbuster US jobs report ramped up bets that the Federal Reserve will announce sharper interest rate hikes as it tries to tame runaway inflation.
While the employment reading -- which was more than twice as high as expected -- indicated the world's top economy remained resilient despite rising prices and borrowing costs, it will complicate the central bank's plans to tighten monetary policy.
Traders have hoped that with several indicators pointing to a slowdown, including GDP figures showing a technical recession, policymakers could begin to ease back on their pace of rate hikes.
Now, speculation is growing that the Fed will have to announce a third successive 75 basis-point increase next month, particularly as officials have said their decisions will be data-dependent.
"Friday's payroll report indicates an overheated labour market that continues to tighten further," said SPI Asset Management's Stephen Innes.
"Hence at minimum, the markets expect another 100 basis points of Fed funds rate increases over the next three meetings... with risks skewed towards significant increases."
All eyes are now on the release this week of US July inflation data, which is expected to show a slight slowdown from June but still at four-decade highs.
The "report seems very unlikely to offer 'compelling evidence' of a slowdown needed for the Fed to pull away from its aggressive inflation-fighting mode", Innes added.
The jobs figures left Wall Street's main indexes mixed Friday, and Asia followed suit with markets fluctuating in early trade.
However, there was some relief that tensions had calmed since US House Speaker Nancy Pelosi's visit to Taiwan last week sparked a furious reaction from China, including live-fire military drills around the island that continued Monday.
Hong Kong fell, with little excitement generated by news that the city will cut the amount of time incoming travellers must spend in hotel quarantine.
