Beat the street: US jobs data much stronger than expected; chips; oil

(Partial Video Transcript)

Oil in focus ahead of Blinken's Middle East visit

Hello, I'm Angeline Ong, and welcome to beat the street, the show that gives you all the tradeable news and data you need ahead of the Wall Street open.

Coming up, jobs on deck, New Year, pain to risk, investors eye the non-fungible tokens (NFTs) for great-cut timing clues, and tips sliding at the moment: Intel, QUALCOMM and Micron Technology are slipping ahead of the cash rate, and we'll find out why in just a moment.

And energy on the spot as well, oil prices in focus amid head comments on inflation and ahead of Blinken's visit to the Middle East.

Stronger-than-expected private payrolls

A very good afternoon to you, and welcome to this new edition of beat the street. Not long now before Wall Street starts turning, and we're just getting those figures come through.

Private payrolls for December: we were looking at 170,000. What we actually got was hotter than expected: 216,000 private payrolls, also stronger than expected at 164K. We were looking up for 130K.

The unemployment rate is pretty much in line with expectations, slightly lower but ever so slightly. We were looking out for 3.8%, and we got 3.7%. Not much of a move yet. Perhaps the volatility index, just bringing that up for you, ticking just a tad higher but not by much.

Let's have a look at Wall Street as well, which is what mirrors the Dow Jones Industrials on the IG platform. And prior to this figure, we had 375. It has come off slightly from there. Let's join my guest Joachim Krement from Liberum right now to find out his early reaction to those numbers.

US economy showing no signs of recession

AO: Joachim, thank you so much for joining us. What do you make of these figures early on?

JK: Yeah, if you just look at the non-farm payroll numbers, they are incredibly strong, confirming once again the picture that the US economy is running really, really hot. No signs of a recession, very few signs of a slowdown in the job market at the moment.

We thought that the November data with 199,000 non-farm payroll job openings was already a very strong number and artificially increased by government workers going back to work. To have 216,000 now, even though the last month's number was revised down to 173,000 means that there is absolutely no decline whatsoever in terms of job creation.

March rate cut may not materialise

That is really kind of a problem also for the Federal Reserve (Fed), I would say, because obviously we had, on Wednesday, the Fed minutes that already took a little bit the enthusiasm out of markets in terms of early rate cuts. And I think with these job numbers, a March rate cut is probably completely off the table and markets will have to price later rate cuts.

AO: Do you think next week's number, the consumer price index (CPI) number, will also allude to the fact that perhaps the Fed might have to dial back these expectations and the timing of its rate cuts?

JK: I think so, because while core inflation is slowing down and will likely continue to drop next week, the decline is slowing down as well. So, the problem is to get this last mile from 3% down to 2%, that's going to be a very, very hard slog.

And in fact, if you look at consensus expectations at the moment, we would expect that the headline number will indeed increase a little bit next week compared to the previous month, just like it has increased in Europe this week and earlier today.

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