13 Jan 2014
Flash: US dismal jobs report the single driver of global markets - BBH
FXstreet.com (Bali) - In the coming days, the single driver of the global capital markets will be how investors see the implications of last week's dismal jobs data, notes Marc Chandler, Head of FX at BBH.
Key Quotes
"We expect the Fed to go ahead with slowing of QE purchases. Fed officials have argued that there has been a cumulative improvement in the labor market. A month's disappointment will not change that understanding, though a second dismal report may be harder to shake off. Moreover, one does not have to venture much beyond the weather is seen mitigating factors."
"That said, the market's apparent lack of conviction may be an important signal in its own right. Specifically, as we have argued, the Fed's recent decisions, and especially the forward guidance, was issued by, for the lack of a better one, a lame duck Federal Reserve chairman."
"The fact that the Federal Reserve that provided the forward guidance is not the same Federal Reserve that is to implement it simply cannot be as credible is the same personnel doing both. "There's many a slip twixt the cup and the lip", the English proverb teaches and investors beware."
"Nevertheless, the jobs data and this uncertainty, means that the market will pay extra close attention to the Fed officials that speak and data in the week ahead. Half of the twelve regional Fed presidents will speak during the week, as will Bernanke. The Fed will also release the Beige Book, ostensibly used for the next FOMC meeting."
Key Quotes
"We expect the Fed to go ahead with slowing of QE purchases. Fed officials have argued that there has been a cumulative improvement in the labor market. A month's disappointment will not change that understanding, though a second dismal report may be harder to shake off. Moreover, one does not have to venture much beyond the weather is seen mitigating factors."
"That said, the market's apparent lack of conviction may be an important signal in its own right. Specifically, as we have argued, the Fed's recent decisions, and especially the forward guidance, was issued by, for the lack of a better one, a lame duck Federal Reserve chairman."
"The fact that the Federal Reserve that provided the forward guidance is not the same Federal Reserve that is to implement it simply cannot be as credible is the same personnel doing both. "There's many a slip twixt the cup and the lip", the English proverb teaches and investors beware."
"Nevertheless, the jobs data and this uncertainty, means that the market will pay extra close attention to the Fed officials that speak and data in the week ahead. Half of the twelve regional Fed presidents will speak during the week, as will Bernanke. The Fed will also release the Beige Book, ostensibly used for the next FOMC meeting."