ANDIKA BULLETin 5 OCT 2024

Blowout Payrolls: Sept 254K Jobs Soar above Highest Street Estimate, Unemployment Rate Drops, Wages Spike so will Inflation come roaring Back?

ANDIKA BULLETin 5 OCT 2024

It turns out that Powell's "emergency" 50bps rate cut was - drumroll - another major policy mistake by the Fed.

Early Saturday morning our time, the BLS reported that at a time when prevailing consensus was for jobs to continue their recent downward slide sparked by the near-record annual jobs revision and several months of downbeat jobs reports, in September the US unexpectedly added a whopping 254K jobs, the biggest monthly increase since March, higher than the average monthly gain of 203,000 over the prior 12 months.

Source: Bloomberg

So the obvious question that needs to be asked is did the Fed even need to cut rates in September, let alone cut by 50bps? The monster upside surprise suggests that the labor market may actually be a picture of strength, not weakness, and it completely dismisses the idea that the Fed could even contemplate another 50bps cut in November.

Markets will need to keep a closer eye on inflation now. Any question Inflation is going back up will brutalise the mkt.

Meanwhile, the world could be on the cusp of another food inflation shock as the benchmark for world food commodity prices recorded the fastest monthly increase in 18 months in September.

A perfect storm of war in Eastern Europe and broadening conflicts in the Middle East, snarled maritime supply chains, extreme weather across croplands, de-growth climate change policies pushed by the far-left in the West, and rogue central bank money printing have all contributed to sticky food inflation. 

The Food and Agriculture Organization of the United Nations' Food Price Index, which tracks the international prices of a basket of globally traded food, averaged 124.4 in September, up 3% from August and 2.1% higher versus the same month one year ago. 

Source: Bloomberg

Have a good weekend!

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