US Open – Strong Jobs report seals Fed on hold till next year, Oil rallies and Gold spikes lower

The US labor market is still very strong.  The nonfarm payroll report came in much better than expected and the prior month was revised strongly higher.  The October reading was able to withstand an impact of 41,600 jobs decline due to GM strike.  The US added 128,000 jobs in last month, much higher than the analysts forecast of 85,000 jobs.  The labor participation rate also ticked higher to 63.3%, the highest level since June 2013. 

The Fed is looking smart today.  The mid-cycle adjustment call seems to tentatively be justified with a robust labor market that continues to keep this record expansion going strong.  US stocks are set to open higher and will likely close at a fresh record high if we don’t see an abysmal ISM manufacturing reading.  The US dollar rallied across the board, but that move could be short-lived as the overall risk-on move will ultimately support the high-beta currencies. S&P 500 futures could continue climb towards 3,100 if we continue to see better than expected earnings next week.

Oil

Oil prices got a boost from a robust employment report that suggests the US consumer is king.  Oil demand from the world’s largest economy seems likely to remain in place as the consumer seems unfazed to the macro risks that are driving the global growth concerns. 

As skepticism comes and goes on whether a broader trade deal can be reached between the world’s two largest economies, oil should be supported as oversupply concerns have heavily been baked in and as markets see modest improvements with demand.   

Gold

Gold prices spiked lower after a robust nonfarm payroll confirmed the Fed will be on hold possibly until the March 18th policy meeting.  Gold should still see strong demand as risks the global outlook will drag onto 2020.  The rest of the world could also see their respective central banks keep their levels accommodation on hold, but even if we don’t see a wrath of additional global stimulus, investors remain skeptical of this stock market rally and will want to have gold as their preferred safe-haven trade.

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