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Today’s US unemployment
number and nonfarm payrolls could have an important impact on next
Tuesday’s presidential poll. Economists are expecting gains of 125,000
in the payroll numbers, but are cautious about the unemployment rate
following last month’s unexpectedly large drop from 8.1% to 7.8%: 7.9%
is this month’s consensus estimate. Yesterday’s ISM manufacturing
numbers came in slightly better than expected, as did the ADP employment
report and jobless claims. Rising home prices are also lending some comfort
to the bulls (chart courtesy of Business
Insider).
 
Of course, eurozone
woes continue to hang on markets like a bad odour, with reports
that Greek stocks
are heading for their biggest weekly loss in two-and-a-half years after the
government released figures showing that it’s falling behind its
deficit reduction targets. On top of this, a Greek court ruling holds that
planned pension cuts may be “unconstitutional”. As a result the
EURUSD has slipped back under $1.29, while the yield on the 10-year Greek
government bond rose 40 basis points yesterday.
Gold, silver and platinum were
performing well during Wednesday afternoon and Thursday morning, but were
hurt following the release of the ADP numbers (palladium doing better than
the other metals though, on account of its wholly industrial investment
profile).
Uncertainty continues to be the
dominant theme in all markets ahead of next Tuesday’s poll. But looking
slightly further ahead, the “fiscal cliff” that looms December 31
carries ominous implications as far as the economy is concerned: the
austerity mix of tax rises and spending cuts that are scheduled to take place
from this date look certain to hurt the US economy – and by extension,
economies elsewhere. Of course, tax rises and spending cuts are arguably what
is needed in terms of reducing the federal government’s $1 trillion+
deficit.
If enacted as many
expect, these
measures will pile even more pressure on the Federal Reserve to keep up its
extraordinarily loose monetary policies – and perhaps even force it
into even greater attempts to devalue the dollar
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