 Good afternoon, ladies and gentlemen. Welcome to this month's non-farm payrolls webinar with me, Michael Hueson, on Friday, the 5th of May, 2023, covering the April US jobs report. And given the events of this week, I think you'd be forgiven for thinking that perhaps today's jobs report has probably lost some of its importance. Certainly, that's my feeling about it. Obviously, we've seen concerns about the US banking sector remain front and center all of this week. Obviously, the Rescue First Republic at the beginning of the week. And that's been followed by the concerns about the health of Pac West Bank or Western Alliance, who've seen heavy falls this week. And obviously we also had to Jerome Powell, Jerome Powell's press conference on Wednesday in the aftermath of another 25 basis point rate hike from the Federal Reserve. I think the big question at the moment of vexing markets is whether we've hit peak rates when it comes to the Fed funds rate. And certainly the market's made up its mind. The market seems to think that we probably have. And even though Powell changed the guidance on Wednesday, or the FOMC changed the guidance on Wednesday, about the prospect for future rate hikes, that doesn't necessarily mean they're completely off the table. However, and is a big however, given what we've seen thus far this week, I think the fact that the Fed has signaled that it may well pause for a while to try and establish the pass through effects of recent rate hikes on the US economy is probably eminently sensible. I think the bigger question is our markets right in starting to price in rate cuts by the beginning of q3. And the answer to that question is depends. I would say no, I'm not a big fan of the idea that we are going to get rate cuts this year. But that's not to say that things won't change or the banking crisis won't get worse. Certainly if you look at US two year yields, they're at the bottom end of their recent range and pretty much back at the level they were a month ago. When I was sitting here talking to you in the in the lead up to the March jobs report and which saw a massive beat on the headline number. So what we've what we've seen so far this week is that while jobless claims have risen from below 200,000 to be trending at around about 240,000 per week. If you actually look at continuing claims they've actually been trending down from highs of around about 1,860,000 to 1.8 million. So you're getting a little bit of a mixed view also the ADP jobs report earlier this week came in well above expectations at 296,000. The ISM services index showed that prices paid nudge tire, while the employment component of the services report was roughly flat around about 50.8. So there are many reasons why today's jobs report could well. Miss to the upside, ie we're expecting 185,000. That seems rather conservative, given the fact that there are still 9.6 million vacancies in the US economy. You know and people are sort of fretting about the fact that they've dropped below 10 million in the last couple of months I mean 9.6 million is a lot of people. And if the unemployment rate is to go up by the amount the Fed expects it to with respect to its end of year forecast of four and a half percent. It's got to go up by another not 0.9% from where it is now, but also those vacancy rates have got to come down quite sharpish. And that would require a significant reversal of fortune for the US economy now the banking crisis may well provide that. Certainly it has tightened credit conditions and it certainly will have made banks more cautious. But if you actually look at the macro data for the US economy, it's still pretty decent. And even though first quarter GDP was a little bit disappointing in the numbers that were released a couple of weeks ago. That was largely as a consequence of running down inventory. The actual personal consumption was fairly solid. So at the moment, we're range trading on the two year. You've seen some big falls, but it does appear to be an area of support around about three and a half 3.6%. And it's pretty toppy anywhere above four. We're also seeing a similar sort of trend player in the German bomb market. There is this perception perhaps that European rates have topped. Certainly President Lagarde gave the impression that she didn't want people to think that. But looking at the way German two year yields have traded over the last two weeks, they've they're on course decline for the second week in a row, just like US two year yields. So there is this expectation or there's this the bond market thinks we've hit peak rates. And really now it's just a question of what does the data tell us in the context of when are we going to get rate cuts? Now, in the case of the US, if the data continues to hold up, while we may not get rate hikes or further rate hikes, we're not going to get rate cuts, not while inflation is still fairly high. And we've got US CPI next week. And that could well give an indication that inflation has continued to fall on the headline number. But the core number is really where the Fed's focus of attention is right now. And that continues to remain sticky. As a reminder, that ticked up to 5.6% on the core CPI in the March numbers. So on Tuesday, that'll be a particular that'll be a particular. So it's not Tuesday Wednesday, that'll be a particular focus for on the on the 10th. There'll be a particular focus of investor attention US CPI. But in the here and now. Let's look at the headline numbers for non farm payrolls. Now, Reuters have kindly decided to leave off the estimates, but they you can you can find it in the calendar. So what I'm going to do is I'm going to tell you what the estimates are for today's payrolls numbers. So on the headline number, the headline number is expected to come in 185,000 and down from 236,000 in March. The unemployment rate is expected to tick up to 3.6% from 3.5%. Now 3.5% is around about 50 year low. Earlier this week, you unemployment drops to a record low. So that gives you an indication of where we are in terms of the labor market. It's it's pretty tight. And even though there's plenty of vacancies, people are having trouble filling them. So I would suggest that wage growth, which, albeit did fall to 4.2% in March, it's likely to stay above 4% in April. And April also tends to be a fairly decent hiring time for an awful lot of what I would call recreational jobs because around about April May time, all the parks, the national parks in America start to reopen. So you get an awful lot of hiring in and around that period of time as the parks reopen and people's attention starts to turn to driving season, which obviously comes up, which is also on the horizon. One thing we have seen this week is a big decline in oil prices. They're on the rebound today. But again, they're at the bottom, they're at the bottom of the range of the over the course of the past few months, they haven't actually taken out the lows that we saw back in March. And if they fall too much, then you can certainly see OPEC plus jumping in again and cutting production. So I think there's limited downside there. And also on US prices, the US still needs to refill the strategic petroleum reserve. So that should limit the downside in WTI as well. But here and now Euro dollar continues to find life difficult anywhere above 110 and a half. We can see from this line here, we've had three attempts to try to get through 111. And there's fairly decent support at 109.40. And I think that will continue to be the way of it over the course of this payrolls report. It's going to be a real struggle, I think, for the Euro to really push above 110, 111 irrespective of what policymakers at the ECB governing council might say when you get German factory orders declining by 10% in one month, then the ECB needs to be very, very careful about how hard it applies the monetary policy break. Cable continues to trend higher. I'm still of the opinion that we can head to 127, 128. Secondly, if you look at UK guilt to your guilt yields, they've held up an awful lot better than US and German to your yields. And that's why the pound has done really well this week because yield differentials are again moving in the pound's favor. We've got the Bank of England next week. I expect I fully expect them to raise rates again by another 25 basis points. I don't really have a choice when you consider that actually the UK economy has done an awful lot better than thought was thought to have been the case at the end of last year. GDP is coming out next week, first quarter, and that's likely to see another expansion, albeit a very mild expansion of 0.1% for the first quarter. The monthly GDP number for March is also expected to come out with a similar amount. We may see 0.2, given the fact that monthly GDP for January was at 0.4%. So we'll have to see whether or not that plays out. What we do have to remember though is in March markets were hit quite hard on the back of the initial blow up of Silicon Valley Bank, which happened on the 9th of March and prompted the big sell-off that we've struggled to really recover from over the course of the last couple of months. But Cable is now starting to run into a little bit of resistance from this trend line from the highs back in June 2021, which currently comes in around about 127 on my chart. So you could see a little bit of dollar strength today because the dollar's had a poor week, it's down on the week, pretty much across the board. It's done particularly poorly against the yen and against the Australian dollar. So another rate hike from the RBA on Tuesday, a surprise rate hike. So the dollar is due to, I think, give up some ground. And if you really do think the Fed is on pause, then the likelihood of further rate hikes diminishes further, particularly if these numbers come in in line with expectations. I think if you are going to see a bit of dollar strength towards the end of this week, the number will either have to come in line or be very, very good to prompt a little bit of dollar buying. We could well see that every single non-farm payrolls number that we've seen so far over the course of the past few months has come in higher than the forecast. So will this be the exception? Or will it not be the exception? Who knows. But for me, I think 185 does seem a little on the low side when you price in seasonal factors. And I think if you're going to be talking about potential pause, then you want to be seeing labor market numbers of around about 10, 15, 20, and then start to see some negative numbers heading into the summer. And I'm not really sure we're quite there yet. So anyway, dolly end. So I'll tell you the opinion that by year end we'll probably see Dolly end in the mid 120s. And we've tried on a couple of occasions to break through the 200 day moving average at around about 137. We did have a false break and I was bald trap here we've come back down again. And we now look to be testing support in and around these what this 132 and a half area. Again, I think it's much more likely that the Bank of the Bank of Japan will tweak its yield curve control settings, pushing the yen higher, pushing the dollar lower. As I say, I think the Fed's on pause. I think we'll probably be on pause for at least the next three months, unless something quite drastic happens or inflation spikes higher at the moment. I don't see much evidence of that, given the fact that US PPI is already down at 3.4% on an annualized basis and could well fall further. And if that's the case from US PPI, I usually tend to think that PPI acts as a leading indicator to CPI. It's also worth keeping an eye on the participation rate when the numbers break. That's been edging higher over the course of the last six months. It's gone from 62.2 to 62.6 over the course of the past six months, which suggests more and more people are returning to the workforce. That could in turn push the unemployment rate up. Again, I'm not bothered about that. If people are returning to the workforce, it means those vacancy numbers could soon come down even faster. That for me is a positive when it comes to the outlook for the US economy. It needn't be a negative. Why should it be? So for me, I think things that point to a strong report, the beat on ADP job openings are still very plentiful, 9.6 million. That's not too shabby spring hiring season. And the big data on the services side is still holding up very well. And manufacturing data has actually started to pick up certainly in the US on the weaker side of the ledger. The increase in weekly jobless claims over the course of the past few weeks, but then continuing claims have been coming down. So, you know, you pay your money, you take your choice. Is that positive? Is that negative? Tighter credit conditions could act as a break on the US economy. It could stop companies hiring people because they're less certain about the future going forward and weaker employment surveys. But overall, I think the outlook for the US economy, it is slowing, but the labour market still remains fairly resilient. And consequently, I would expect that the best that we can hope for, it's unlikely we'll see further rate hikes. And I think that for me is probably the key takeaway that I've taken from events this week. So even if we get a decent report, we may see a spike in yields, but I don't think that will mean that we'll see a rate hike in June. Because we have to bear in mind this is one number. We get two more CPI reports before the next meeting, and we also get another non-farm payrolls report as well. So the market may react on a short-term basis, but what it won't do is certainly determine the overall direction as it goes forward. And for me, it's now more about when we get the next rate cut or the first rate cut. And again, the market is pricing in potentially July or August. I think that's wishful thinking on the market's part. I think we could stay at current levels for quite some time and certainly pricing in one or 200 basis points of rate cuts by year end. Unless there is a significant deterioration in economic conditions. I think that is highly unlikely. In any case, we're just counting down to the overall numbers. But for me, I think there's nothing to suggest that we're going to break out of the range that we're currently in. If we look at the S&P 500, we can see from this chart here that we've got fairly decent support in and around these areas down here. But it's 4,200 area, big, big resistance. I think we're going to continue to range trade over the course of the next few days and weeks. And this is essentially how I would look to trade these markets. Just pick your levels and range trade the levels. If we look at the NASDAQ 100, we can see from this that there's potential for us to certainly edge higher today. Obviously, Apple's numbers are fairly decent and we're getting the numbers breaking right now. Non-farm is 253, so that's a fairly decent result. I thought we'd get a better number on that, so that is fairly decent. Let's see if we get a revision to that. On that, the unemployment rate falls to 3.4%. Wow. I mean, that's a pretty decent report. So again, really positive for the dollar. Let's get that down there. Average earnings are up as well, 4.4%. So double bubble here, solid on the average earnings and 4.3 revised upwards on the headline number. Now that's interesting. The revision lower on the March number. So let me just work on that. I'm assuming that revision is right. At the moment, it's not confirmed on Bloomberg. So take that, what I've just said with a pinch of salt, because Reuters have a tendency to be fairly unreliable when it comes to their push-throughs on the calendar. But what I'm seeing on my Reuters is that there is a downward revision. I would be very, very surprised by that. But let's just see what comes out over the course of the revisions as we get them. Let's have a look at a participation rate, 62.6%. So again, it's a really positive report from what I can see based on those numbers that are broken now. Obviously, the dollar is higher. You're a dollar down below 110, cable below, back below 126. And we are getting the revisions and 165 on the March numbers revised down from 236. So that's interesting. Private payrolls were revised lower from 239 to 123. Change of manufacturing, average hourly earnings. So wages up. Again, it's a decent report. There's certainly nothing there to suggest that the U.S. economy, hiring may be slowing. But we're not certainly, we're not, we're certainly not seeing a marked slowdown. So we may get a, we'll probably get a dip back to 109.40 in euro dollar. But overall, I think that jobs report matters slightly less than what we're seeing when it comes to the U.S. banking sector. Let's take a quick look at the two-year yield. That was already higher, leading into the numbers. It's probably even higher now. Yep, 10 basis points up on the day. There's your two-year. So it's really all you need to know. So we're pretty much back in the range, bottom of the range on the two-year and about 3.65. Top of the range anywhere near and above 4%. So we're pretty much back where we've been for the past three or four months. It's very much a range trade on the markets at the moment. We've remained in a range on euro dollar. We've remained in the range pretty much on NASDAQ, S&P and the Dow. And overall, I think the markets are more concerned about what's going to happen with PAC West Bank or Western Alliance and U.S. banks when markets reopen in just under an hour. So if anyone has any questions that they want to ask me about particular markets that they want me to cast my eye over, I'm more than happy to do that. But for the here and now, for me, I think this jobs report just really supports the idea that the U.S. economy is fairly resilient, rates are likely to remain on hold, not cut, on hold now, on a pause for quite some time to come. And the markets are going to continue to range trade from here on in. As I say, there is a questions box somewhere which you can ask me questions and hopefully I can answer to them to your satisfaction. So let's go Aussie dollar. Actually, funny you should say that James, I was looking at that earlier today. Right, we next week, we got China trade. Now looking at this, for me, the big level is 68. Why? Because obviously we've got these series of peaks through here. It's also a little bit of a pivot level in and around here. But for me, I think this potential for the Aussie to go a little bit higher, certainly not today. Certainly, I think in the context of rate expectations, we've seen a significant shift between Australian rates and US rates over the course of the past few days. Obviously the surprise rate hike from the RBA on Tuesday has played a part in that. But I think if we get some decent Chinese trade numbers later next week, and it shows that far from the economy slowing down in April, it starts to accelerate. We could see a rebound in commodities, copper, what have you. That should be good for the Aussie dollar. And consequently, we should see a retest of this series of peaks through April around about 68. So for me, I'm fairly constructive when it comes to the Aussie dollar. But obviously we have to bear in mind that we're in a range and this range can be defined by this piece of price action right here. But we have seen a fairly decent move higher through these lows there. So hopefully that gives you some indication or some idea of my thought processes around Aussie dollar. Any other questions, ladies and gents? I'm going to quickly look at gold, because gold started to retest its record highs recently, but obviously the spike up in yields now is acting as a drag. We can see this 2070 area is a big, big resistance. Those of you who followed me on a regular basis will know very much that I'm a levels trader. I wait for my opportunity and pick my levels, trade in and out, as and when I see an area that I particularly like. And it's usually just basic support and resistance levels. It's nothing too complicated, essentially, because I don't have time to be complicated. But certainly what we've seen here with respect to gold would appear to suggest that we could well see a bit of a bit of a correction back down to around about $2,000 an ounce on that basis. So it's a fairly decent, fairly decent chart there. As I say Brent crude in West Texas could well see a little bit of a move higher. Given the fact that we've bounced off the March lows on Brent, we can see that there around about $70 a barrel. That's a fairly decent support area and likely to remain so. Obviously if we do break below there, then I sort of revise my assessment of the market. Anything else? Ladies and gents. Look at the look at the Canada. Let's look at the Canada because we also saw the Canadian jobs report as well. So let's look at that. On the basis of the Canadian numbers. Let's just quickly find out what's going on there. It's 41,000 jobs added in April up from 34 points 34,700 in March. So a decent Canada jobs report. And that's pretty much born out by the move in dollar card there. Big, big, big Canada gains there. The participation rate in Canada remains at 65.6%. So again, pretty much okay. And just been pointed out to me that the two month payroll net revision is negative to the tune of 149,000. So, as again, you've got positives and negatives in that payrolls report. So the unemployment rates decent, but the two month net revision, not so much, but we did get a seasonal boost in April because of the 253,000 that we got in April. So pretty decent overall, well, average. Any other questions being asked if there's a free alternative to Bloomberg in terms of finding these revisions quickly. If there was, I think I'd use it with respect to the gold price, not really know because we need to basically go above it and hold above it for me. I think when you're talking about a record high or a record low, you need follow through on it. And if you don't get follow through on a move above a record higher record low, it becomes it becomes very suspicious. And that for me, I think is one of the things about gold. I think, you know, there is potential for us to record new record highs, but certainly not on the basis of those those particular numbers that we saw over the course. That we've seen that we've seen today. CPI next week might do it, particularly if we get a week CPI number. We're expecting 5% CPI for April, which will be unchanged from March, but more importantly than that core CPI is being forecast to drop from 5.6% to 5.4. So that's that's potentially could be interesting. If we get a week CPI reading, we could start to see those yields come back down again. So it's certainly worth keeping on US CPI next week. Obviously we've got the Bank of England next week as well. As I say, I will get we will get new projections for inflation and GDP from Mr Andrew Bailey and his cohorts. Let's hope they're a bit less. Let's hope that they do a better job of them than they've done in the previous lot, but certainly given the fact that they were projected predicting a two year recession in November. I generally don't tend to take too much notice of anything the Bank of England puts out because usually it ends up as chip paper a week later. But overall, I'm still expecting to see some form of dissent on any decision to raise rates from the usual suspects of 10 Rero and Dingra, but 10 Rero is less relevant now because she's being replaced in June, July by Megan Green, another economist from the US, who I happen to know, and tends to and she tends to lead slightly more hawkish so I think the Bank of England will start to have less of a dovish voice coming out of it in the wake of Green's appointment so it'll be interesting to see how that dynamic plays out in 10 Rero departs. Anything anything else, ladies and gents, before I wind this up. No. Okay. All right, well, thank you for your time today. I'm going to say it's a middling report unemployment really good wages really solid gains there. So it's more positive than negative even if you take it even if you take into account the fact that there's been a negative two month provision of around about 150,000. And here and now I'd just like to wish you all a good long weekend. Yeah, good long weekend. Hope you enjoy the coronation. Hope the weather's decent for you. I probably won't be paying too much attention to the coronation. It doesn't really interest me that much. But it gives us an extra day off. So that's always a good thing. And see you all the same time, same place next month for another non farm payrolls webinar. Thanks very much for listening and have a great weekend.