Halister News

(Bloomberg) -- Greater job creation in U.S. reflects growth, while weak wages show “firms are not yet allowing” the labor force to reduce margins and that should lead to “higher profitability,” Nomura analysts led by Jordan Rochester write in July 7 note.

• There shouldn’t be too much impact on timing of Fed balance- sheet reduction or lead to “fresh impetus” on USD selling in USD/JPY
• Market’s initial reaction to buy EUR/USD on dip given that numbers are “good for growth,” ECB normalization is “a far more potent animal at these levels” is “something we would agree with” 
• “Modest” rise in avg hourly earnings suggests “capacity constraints are not a near-term issue”  
  • Each 0.1 weakness in AHE worth 2-3 bps on 10s, so rally is “fair”
• Data should be good for risk if rates incorporate numbers as volatility “suppressant” on higher yield trajectory
• Canadian numbers surprise on upside in “surprisingly impressive” separate jobs report, +45.3k vs 10k expected, unemployment declined to 6.5%; USD/CAD moving lower on “strong numbers” ahead of next week’s BOC meeting
  • Nomura expects hike at BOC meeting, is “cautious on chasing USD/CAD lower” due to high risk of “dovish tone relative to the market pricing”

To contact the reporter on this story: Anna Windemuth in New York at awindemuth1@bloomberg.net To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net Vivien Lou Chen