A growth concern slide

The global focus was on US employment data this week as the US Fed’s data dependent policy has  meant that  investors have increasingly turned more short-term orientated in their decisions.

Some Fed members  spoke during the week, causing nervousness ahead of the release of the US non-farm payroll data as  they stressed that the next June meeting remained an open meeting whether rates will be hiked or  not.

The market was only pricing in a 10% probability of a rate hike in June and if today’s payroll  data did surprise to the upside, then many investors would have been caught off-side. But actual  non-farm payrolls for April came in lower than expected at 160,000 – the lowest reading since September 2015 and below consensus forecasts of 200,000.

The  unemployment rate held steady at 5%. This followed on employment data released earlier this week  which showed that unemployment claims rose and that private sector employment increased by less  than expected. With employment data being such a key determinant of US interest rate policy, the  recent softness might j ust mean that the Fed holds off with a June rate hike.

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