 expectations in the US perfect spot to bring in Mark Bailey he's joining us from fake securities mark welcome to the program I haven't run our viewers through the actual details in the non-farm payroll report yet this hour could you just give us a brief summary of what happened there yeah sure good morning Nadine it's nice to see a bit of Sydney Sun and Sun in the markets as well I mean that non-farm payroll figure for those that aren't over it was was very strong beating consensus expectations quite clearly not just in terms of the headline figure of 255 jobs created on the consensus of 180 but also in terms of average earnings and average hour hours works as well also beating consensus there was also a increase in revisions in terms of those previous two months as well which was positive the only negative was that the headline jobless rate increase but again that was probably largely driven by an increase in participation rates so across the board a pretty strong set of figures and one that will you know certainly give the Fed a food for thought for its September meeting it doesn't meet in August the September meeting is on the 20th to the 21st of September and and you saw that reaction as well in the in the Treasury markets you saw you know 10 year bond yields the US Treasury is up around about nine basis points to 159 as well so yeah a very strong figure and in terms of in terms of market pricing as well you know the the pricing for the market for a hike in September is around about one in four is around about 25 25% chance I think that's probably about fair I think you know the Fed will continue to talk the market that it's potentially may hike in September but I think when it gets there it probably won't do it at the moment it'll still wait for more data you know inflation is still pretty pretty benign and okay mark so what we're showing what we're showing our viewers on screen is actually where the Fed bets are for December interest rate hike so after that jobs report we saw futures traders seeing a 49% chance of a hike by December up from 36% before the reports released and as you mentioned I've lost you okay I'm not sure if we're having audio problems with you mark can you hear me there now okay it appears as if we have lost I've got your back in so I'm back it looks as if that chart did something with the audio connection there so all I was saying is that as you're mentioning we saw the Fed funds rate now pricing in about a 49% hike of a December interest rate hike coming a 49% chance of a December interest rate hike coming from the US Fed so as you mentioned off the beginning as well it was one of those good news was interpreted by the market as good news because we saw the S&P in the doubt around those all-time highs so when it comes to this chance of a hike do you think that that December is on I mean realistically is the US economy ready for a hike I think it's it's live at September will be as well in the dean I think 50-50 is probably a bit high again I'd probably say even December is probably a one in four chance as well so I think probably as we go through September I'm still not convinced that we're gonna see the strong strong enough data for the Fed to be convinced of lifting why not though mark why not I mean it's an easy thing to say but why not I just I just don't think in terms of the the jobs growth that we're seeing it's gonna be sufficient to start to drive the real economy in terms of business investment which was still seen very very weak figures GDP was was weak as well and also I think you know you'll see a bit more longer-term kind of reaction and benefit from the from the brexit and the impact there in the UK and in the broader European markets as well and also probably get some data out of China and I'm again I'm not convinced that we're gonna see the strength there that will allow the Fed to say yep now it now is a time to hike again you know especially given you know the the US dollar and they're very very conscious that they don't want to strengthen that too much in terms of their exporting industry in the States as well so I think you know there's there's still sufficient weakness in in certain areas also the housing market you know has been performing very strongly that seems to have going going through a bit of a lull period now which has been one of the key drivers going forward so I guess I'm you know kind of more on a glass half empty rather than glass half full kind of stage with in terms of the data that I'm seeing out of the States so a skeptic when it comes to the data in the States now what did you make of the BOE's move on Thursday to increase QE in particular what's been the impact on the UK guilt market and more importantly on a sterling corporate bonds yeah I mean in terms of the QE program I think the big surprise there was the Bank of England's decision to start to buy around about 10 billion worth of corporate bonds now the important part there is that it's got to be investment grade and they've got to be non-bank and non-insurance corporate bonds as well so in terms of the reaction that we've seen in the the UK sterling corporate bond market we've seen spreads contract pretty aggressively since that announcement and around about 15 to 40 basis points tighter and we're going to see liquidity has dried up there's not a lot of offers on the screen in terms of what we're seeing there on the broker side of things investors are very reluctant to sell obviously when the Bank of England does start to buy in September also as we'll see more and more opportunistic issue is coming into that sterling markets on Friday we saw Vodafone they actually issued a 40-year bond that's a longest dated bond that we've seen in 2016 they issued a billion sterling they probably had demand for around about three billion and that price considerably tighter than guidance of 185 I think it printed at Guilds plus 168 so we're seeing a lot of demand there'll be more issuers coming into that space on the back of the Bank of England potentially starting to buy and increase its QE into that corporate space and what you're seeing as well with the Bank of England as well in terms of that additional Guild purchases which is 60 billion you're seeing that yield curve flatten and that the twos to 30s yield curve now is at 135 basis points and that is the the flattest level that we've seen since October 2008 so again that's another interesting dynamic that we're seeing in that space as well but given the fact that you sort of alluded to the US Fed potentially being able to use Britain and Brexit as an excuse not to hike in 2016 do you think that the BOE with its cut in the interest rate with its increase in QE with some of the liquidity measures it took with the banks to get that interest rate cut into the hands of UK consumers you still don't see that as having a real significant impact on the UK economy as in you still do see the chance of recession coming this year I'm not sure we'll get to recession I think we'll see some significant slowing down on on the UK GDP growth forecast and that's essentially what the Bank of England has already said in its in its statement maybe not so much this year but in 2017 and 2018 in addition as well you know yes the the Bank of England is affording the the UK banks a hundred billion of additional liquidity low-cost funding to try to get that into the real economy into businesses into into consumers pockets for for low rate mortgages but I'm not sure the demands there is kind of the classic clean kitchen liquidity trap where it's kind of almost irrelevant what term what the interest rates are you know the consumers and businesses just aren't feeling confident they don't have the animal spirits at Keane's coin and so I just don't think they'll utilize that facility so I'm not sure that it's going to really have a major impact on the UK economy I think we're going to still see a lot of businesses holding back from due to the uncertainty in terms of the Brexit which still you know nobody really knows if it's going to happen how it's going to happen what the implications are and in that type of environment it's quite rational that businesses just kind of pull their necks in and don't go out and buy plants and equipment and we'll just wait and see what's what's around the corner okay mark Bailey plenty on the agenda we didn't even touch upon you know what's happening in in our local market but we will get there later in the week thanks for joining us thanks indeed have a good one taking a break here on market countdown when we