It’s been a relatively lackluster start to the trading week, following last week which was anything but.
There’s no doubt that the last seven days have left investors with plenty to work out and the jobs report on Friday yielded a response in the markets which probably sums up how confused investors appear right now.
It was another hot report with little in it to suggest we’re seeing cracks appearing that will deliver the slack that the Fed thinks it needs. Trade around the report was volatile, clearly, with the final view seeming very positive. I’m not sure how sustainable that is under the circumstances, especially considering the response to the Fed two days earlier.
But again, perhaps that’s a sign of where things stand. After the Fed, I thought the markets were too negative. The focus on where rates could rise to overshadowed the fact that the pace is likely to slow, buying time for the data to deliver what the Fed needs to warrant doing so more. But that jobs report on Friday does not fall into that category so I think confused probably sums up where markets stand now and how today has started.
Which brings us to the inflation report on Thursday and what that could do for sentiment as we move toward the end of the year. It is one of two inflation reports before the next meeting but you have to think we need two good readings for the Fed to scale back its expectations and give markets the festive cheer they so clearly want. Until then, more choppy and confused trade may be what we get.
Bitcoin rally stalls
Bitcoin did well following Friday’s jobs report but it has stalled since, even gone into reverse today after struggling around $21,500 over the weekend. If sentiment can hold up in broader financial markets, that should be a big positive for Bitcoin which could be eyeing up a run toward the September highs, maybe even the August peak. As ever, there’s a lot of uncertainty around this, perhaps more so now. The inflation report could lay the foundation for the next big move in financial markets, with a lower reading potentially boosting sentiment in the weeks that follow.