The United States controls an unemployment rate below 4% and Chinese imports slow

A look at the day ahead in the US and global markets by Mike Dolan

After a frenzied week of G7 interest rate cuts, new record highs for stocks, a new rush on AI and a wave of elections, global markets froze awaiting the report on American employment.

The May jobs report comes just before next week’s Federal Reserve meeting and most labor market updates in recent days have pointed to a gradual cooling in employment.

For the record, consensus forecasts indicate that nonfarm payroll growth accelerated slightly last month, to 185,000 from 175,000 in April – and that the monthly increase in average wages also increased to 0.3%. .

But the unemployment rate is expected to remain at 3.9% and if that holds, Deutsche Bank strategists point out, it will mark the 28th month below 4% – the longest such period since the 1950s.

It would have to be a shock for the recession alarm to sound and for it to reach 4.3% to trigger the oft-cited “Sahm rule”. Developed by former Fed economist Claudia Sahm, it suggests a recession warning signal if the rolling three-month average unemployment rate rises half a point above the previous 12-month low.

But the slowdown in the labor market observed this week with weekly jobless claims, the drop in vacancies and the contraction in the components of employment in the services sector has already allowed the Fed to reduce its rate cut forecasts. at two quarters of a point this year, starting in September.

And the 10-year Treasury yields

The MSCI world stock index was flat ahead of the report after hitting an all-time high on Thursday and Wall Street stock futures were flat before the bell.

Oil steadied as OPEC+ members Saudi Arabia and Russia signaled they were willing to suspend or reverse oil production increases, but crude was still heading for its third loss consecutive weekly due to demand concerns.

Chinese stocks were once again downbeat and significantly underperformed in Asia, even as the country’s May export figures beat forecasts.

But amid global concerns about a new surge in Chinese exports to flatter an economy suffering from still fragile domestic consumption, the big worry is that import growth will slow much more than expected, to just 1.8% compared to a jump of 8.4% the previous month.

Chinese stocks were also hit by a report that U.S. lawmakers pushed to ban Chinese battery companies linked to Ford and Volkswagen from exporting to the United States.

In Europe, stock markets fell and the euro strengthened slightly after the European Central Bank announced its first long-announced rate cut on Thursday – but sowed some doubts about the scale and speed of the cut. a further relaxation from there.

The markets will not experience a further decline until September.

And after the artificial intelligence boom resumed this week, with Nvidia hitting new highs and surpassing a $3 trillion market cap, the focus was now on how the company’s shares would respond to the stock split announced today.

Nvidia fell 1% on Thursday, once again becoming the third most valuable company in the world the day after jumping ahead…

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