New bounce for the markets: job report increases pressure at central bank

The US Bureau of Statistics has just released the jobs report and it has become another setback for the financial markets.

While prices are still recovering from yesterday's big crash, investors are now pricing in a tougher central bank by stronger-than-expected numbers.

The US labour market is in a much better position than expected, according to figures from the Bureau of Labor Statistics (BLS). On almost all points, the job report beats expectations:

• In October, 165,000 jobs were added, well above the expected 59,000 to 65,000.
• Unemployment fell from 4.2 to 4.1 percent, while economists expected no change.
• Wages rose 0.4 percent on a monthly basis, against 0.3 percent expected. On an annual basis, they are 3.1 percent higher, while economists expected 2.9 percent.
• The employment rate, the proportion of adults who work or are looking for work, rose from 61.8 to 61.9 percent.

The previous two months also turned out to be better than expected. August and September together revised 84,000 jobs higher, bringing September to 60,000 instead of 29,000.

As a result, the average for the last three months has skyrocketed from 51,000 to 137,000 jobs per month.

Moreover, the fall in unemployment is real. In July, it also fell to 4.1 percent, but then mainly because people stopped searching. Now the number of people in work increased by 463,000.

The hourly wage rose by 14 cents to 38 dollars, the largest increase this year. That's good news for employees, but higher wages can further boost inflation.

There is a crack in the report. The number of people forced to work part-time increased by 339,000, mainly because employers cut hours.

As a result, the broader unemployment rate U-6, which also includes part-time workers who want to work more, increased from 7.6 to 7.9 percent.

The American labour market is therefore not cooling down, but is picking up again. For the Federal Reserve (Fed), this is a clear signal to raise interest rates further in December.

Fed Chairman Kevin Warsh said last month that the labor market is holding up well, allowing the central bank to focus fully on inflation. This job report fully agrees with him.

Prior to the figures, the probability of an interest rate hike next month was estimated at about 72 percent. Now that has risen to 77 percent.

The two-year rate, which reacts most strongly to expectations about the Fed, has made a significant jump of 1.48 percent. The US dollar also shoots up and then stocks, Bitcoin and gold often move in the opposite direction.

Now it is not so bad with the damage.

• Bitcoin (BTC) initially made a small dip of 0.55 percent, but has since recovered quite well. The cryptocurrency is still at a modest loss today.
• Gold fell 0.82 percent and has already partially recovered. Yesterday, the precious metal was one of the few assets that turns green, but today it is declining somewhat.
• The futures of the Nasdaq 100 are down 0.25 percent and the S&P 500 is down 0.19 percent.
  The indices still turn green and the tech fair in particular is doing well today. Chip stocks, which took the biggest hits yesterday, are recovering the strongest: Nvidia has already recovered by 4.44 percent in forex trading and Micron has even risen by 9 percent. That alone does not eliminate yesterday's losses.