Lower than expected unemployment figures threw a lifeline to markets yesterday, providing some much-needed buoyancy to the choppy conditions we have seen so far this week. Jobless claims came in 7k below expectations and 17k below the figure from the previous week, easing concerns regarding the US labour market. Stocks were all too happy to latch onto the positive sentiment, pushing all major indices higher over the course of Thursday’s session. The Nasdaq Composite climbed a commendable 2.9% yesterday, followed swiftly by the S&P 500 with a 2.3% rise and finally the Dow Jones brought up the rear with a 1.8% gain.
Tensions in the Yen continued to ease off over the last few sessions, USDJPY now back up to 147 from lows of 141 on Monday. For many traders, the Japanese carry trade still has a long way to unwind and the events of this week were merely the first chapter in a painful deleveraging process.
The BoJ certainly has its work cut out if it plans to continue rebalancing rates on the Yen with minimal disruption to the Japanese economy – a predicament also shared by the Federal Reserve. The September rate decision is just around the corner and the supposed “soft landing” target may be harder to achieve than first assumed, leaving markets vulnerable for now. That is to say nothing of the geopolitical theatre developing in the Middle East, where contentions between Israel and Iran continued to ramp up this week.
Ever the safe-haven asset, gold posted a 1.8% gain yesterday to close at $2,426 an ounce. Bitcoin considerably amplified the move, surging 12% to close around $61,700.
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