Non-farm payroll data was weaker than expected at 130,000 new jobs, missing forecasts in the 160,000--180,000 range. The consensus culprit is no surprise, the lingering trade war with China. The bad news was partially tempered by the unemployment reading, which was unchanged at 3.7%.
In a soft echo of the bad-news-is-good-news cycle leading up to the 25 basis point interest rate cut on July 31, the non-farm data supports the expectation of another Fed rate cut later this month.
Oil gave back some of its impressive 4% gains from yesterday, with November Brent crude retracing by 1.7% to trade at $59.91 per barrel. The losses put oil back into the red in a volatile week.
Global equities were buoyed by a stimulative rate cut by Beijing in required reserve ratios. The People's Bank of China announced a 50 basis point cut in the required reserve ratios for all banks, effective September 16th. In an effort to stimulate small business lending, the central bank added two additional 50bp cuts in October and November for banks that direct enough loans to small businesses.
In total, the release of liquidity is expected to be over $125 billion (900 billion RMB). The move lifted stocks around the world. U.S. equities were up in morning trading but have retraced to near flat approaching midday.
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