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This Week: Resilient US jobs report may test recent stock gains

The S&P 500, which is the benchmark index measuring the overall performance of US stock markets, surged by 9.1% in July. This blue-chip index has capped its biggest monthly gain since November 2020, climbing on the back of strong earnings from big names such as Apple and Amazon.

However, like the Fed, risk assets may be “data-dependent” (meaning to say that their next move would depend on the economic data).

Hence, this week’s US nonfarm payrolls report could be crucial in determining how long these recent gains in US stocks will last.


Monday, August 1

  • AUD: Australia July inflation
  • CNH: China July Caixin manufacturing PMI
  • EUR: Eurozone June unemployment rate
  • USD: US July ISM manufacturing data

Tuesday, August 2

  • AUD: Reserve Bank of Australia rate decision
  • USD: Speeches by Chicago Fed President Charles Evans, St. Louis Fed President James Bullard
  • Starbucks 2Q earnings
  • BP 2Q earnings

Wednesday, August 3

  • NZD: New Zealand 2Q unemployment
  • AUD: Australia Q2 retail sales
  • CNH: China July Caixin services PMI
  • EUR: Eurozone June retail sales, PPI; Germany June external trade
  • USD: US June factory orders, July ISM services index
  • Brent: OPEC+ meeting
  • US crude: EIA weekly oil inventory report

Thursday, August 4

  • AUD: Australia June external trade
  • EUR: ECB publishes Economic Bulletin; Germany June factory orders
  • GBP: Bank of England rate decision
  • USD: US weekly jobless claims; Cleveland Fed President Loretta Mester speech
  • Alibaba 2Q earnings

Friday, August 5

  • AUD: RBA releases Monetary Policy statement, including updated economic forecasts
  • GBP: BOE Chief Economist Huw Pill speech
  • EUR: Germany June industrial production
  • CAD: Canada July unemployment
  • USD: US July nonfarm payrolls


Certainly, investors have had a lot to chew over recently with the “Goldilocks” scenario of weak economic data (the US economy has fallen into a “technical recession”) and those positive megacap earnings topped off with a potentially less hawkish US Federal Reserve.

Investor fears about the aggressive pacing of the Fed’s rate hikes has started to wane while the idea that inflation may have started to peak is settling in again.

That said, although the “technical” recession confirmed by the data in the US last week is good news for financial conditions, perhaps investors should be asking themselves if we should really be celebrating recession risks. The signal by policymakers at its FOMC meeting that it may slow the policy tightening path should perhaps be tempered by the fact that the Fed has historically paused just before previous recessions.

US non-farm payrolls will be the main event of the week with consensus expecting a headline print of 250,000, with the jobless rate expected to remain near multi-decade lows at 3.6% and wages still growing around 5% annually.

Fed rate hikes of at least 50bp are still priced in for the next meetings in September and November.

We expect volatility to spike as Fed officials are now much more data dependent. But a resilient jobs market in July, if shown to be true this Friday, may postpone the prospect of a “real” recession for now, allowing the Fed to press on with its rate hikes as intended.

Such a scenario, accompanied by technical events such as a pullback from overbought conditions (14-day RSI exceeding the 70 threshold), may prompt the partial unwinding of gains seen in US equities last month and see a return closer to 4,000 for the S&P 500.

This Week: Resilient US jobs report may test recent stock gains



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