Investors Await U.S. Jobs Report Amid Signs of Economic Strength; India’s Central Bank Holds Rates

Investors Await U.S. Jobs Report Amid Signs of Economic Strength; India’s Central Bank Holds Rates By Vicky Ge Huang

The spotlight is on this morning’s monthly U.S. jobs report.

The reading, due at 8:30 a.m. ET, will be the last before the Federal Reserve’s next policy meeting, in two weeks. Signs the American economy remains strong could reduce traders’ bets on a coming rate cut.

Fed Chair Jerome Powell has said the economy is looking better, which means policymakers can take more time over cutting.

Economists polled by The Wall Street Journal forecast the U.S. added 214,000 jobs last month, up from just 12,000 in October. The reading may be distorted by hurricanes and strikes prior to November.

Meanwhile, in Asia, India’s central bank kept its policy rate unchanged as it walks the line between curbing inflation and boosting growth after a surprisingly weak quarter.

And in Africa, Kenya’s central bank cut its interest rate by three quarters of a point as the economy seeks to boost growth amid easing price pressures, while Uganda’s central bank stood pat, citing softening inflation.

Top News Why a ‘Robust’ Jobs Report Probably Wouldn’t Derail Fed Rate Cut

A “decently robust” U.S. jobs report on Friday probably wouldn’t derail the Federal Reserve from delivering an interest-rate cut this month, as the Fed’s policy rate remains restrictive, according to Russ Brownback, head of global macro positioning for fixed income at BlackRock.

“The broad consensus is that that data is going to be strong on Friday, with a real bounce back,” said Brownback by phone. “The data for October was brought down by the terrible weather and the strikes,” he said, referring to employment disruptions from hurricanes and striking workers.

Traders on Thursday morning were pricing in a high probability the Fed will decide later this month to lower its benchmark rate by a quarter percentage-point from its current range of 4.5% to 4.75%-despite evidence that the economy continues to grow, inflation remains a bit sticky and the U.S. stock market is trading around record highs. (MarketWatch)

Inflation Threatens Fed Rate-Cut Expectations Again. Here’s Why.

With investors looking toward Friday’s November nonfarm-payrolls report, market participants see the potential that it could be overshadowed by an entirely different set of data: next Wednesday’s consumer-price index for the same month. Inflation is back in the spotlight and could supplant this week’s jobs data when it comes to how traders, investors and officials at the Federal Reserve think about further interest-rate cuts. The reason is that after six straight months of declines in the annual headline CPI rate-for March through September-that rate is expected to creep up again for November following a bump up to 2.6% in October. (MarketWatch)

India’s Central Bank Holds Rates Again

Reserve Bank of India Gov. Shaktikanta Das said Friday that the monetary-policy committee decided to maintain its policy repo rate at 6.50% , with four of six members voting in favor of the move.

Kenya’s Central Bank Cuts Key Lending Rate

Kenya’s central bank slashed its interest rate by 75 basis points to 11.25% as east Africa’s largest economy seeks to rev up sluggish growth amid easing inflation.

Uganda’s Central Bank Holds Key Lending Rate at 9.75%

Uganda’s central bank maintained its key lending rate at 9.75% , citing easing inflation amid increased investment in the country’s fledging oil-and-gas industry.

Australia’s Chalmers Has Chance to Build RBA Rate-Setting Board With Enormous Firepower By James Glynn

As the Reserve Bank of Australia prepares to move forward under a new dual-board structure from early next year, there’s far more at stake than meets the eye.

One board will deal with governance matters affecting the diverse operations of the central bank, while the latter will determine the setting of interest rates.

The new arrangements will replace the current single-board structure that was deemed unfit for purpose by a recent independent review. Read more .

U.S. Economy U.S. Economy Is Doing What Few Others Are: Getting More Productive

Inflation and the labor market are both cooling, but a subtle force has powered strong U.S. economic growth nonetheless. Americans keep finding ways to get more done at work .

Jobless Claims Show Extremely Low Layoffs Amid Sturdy Economy

The number of Americans who applied for unemployment benefits during Thanksgiving rose to a six-week high, but jobless claims stayed at extremely low levels in a clean bill of health for the U.S. economy.

New claims rose by 9,000 to 224,000 in the seven days ended Nov. 30 from 215,000 in the prior week, the government said Thursday. Still, any number in the low 200,000s is well below the historical average. (MarketWatch)

Forward Guidance Friday (all times ET)

8:30 a.m.: U.S. Employment Report

10 a.m.: University of Michigan Survey of Consumers – preliminary

12 p.m.: Federal Reserve Bank of Cleveland President Beth Hammack speaks at The City Club of Cleveland Friday Forum

1 p.m.: Hoover Institution event with FRB San Francisco President Mary Daly

3 p.m.: Consumer Credit

Monday

10 a.m.: Monthly Wholesale Trade

10 a.m.: Employment Trends Index

Commentary Widely Overvalued Stock Market Doomed? Yes, but Maybe Not Yet

Here are two particularly scary forecasts for investors: Goldman Sachs thinks the S&P 500 will make just 3% a year over the next 10 years, as Big Tech dominance eventually falters. Bank of America expects 0%-1% a year for a decade, a catastrophic investment prospect.

Their conclusion: Buy stocks anyway, because the next year looks great, writes James Mackintosh for The Wall Street Journal.

The underlying problem is simple to understand, and hard to do much about. Stocks are super expensive on just about every measure. That historically has meant low returns in the long run. Hence the dire 10-year forecasts.

But history also suggests no link at all between nosebleed valuations like we have today and returns over the next year. Expensive stocks can always get more expensive, and often do.

The S&P 500 and Nasdaq are at record highs, and U.S. stocks are really expensive. Six of the Magnificent Seven-Apple, Amazon.com, Meta Platforms, Microsoft, Nvidia and Tesla-are more expensive still, though Alphabet lags behind a little.

The justifications the bulls trot out become less convincing the more stocks rise. Three are popular: AI, rising earnings and American exceptionalism. Read more .

Research Progress on Inflation Fight Is Likely Stalling, Wells Fargo Analysts Say

The U.S. consumer price index for November will likely show that progress on the inflation fight is stalling, Wells Fargo’s Sarah House and Aubrey Woessner write. They forecast the 12-month gauge at 2.7%, up from 2.6%. They see the core reading “stuck in the narrow range of 3.2%-3.3% for a sixth straight month.” While some sources of inflation “such as an overheated labor market, continue to dissipate, new headwinds to disinflation have emerged,” including the potential for tariffs and tax cuts, they say. The CPI report is due Wednesday, one week ahead of a Fed decision, for which a 25-basis-point interest rate cut is being priced in futures markets. – Paulo Trevisani

Basis Points Food prices climbed to a 19-month high in November driven by vegetable oils, data from the Food and Agriculture Organization of the United Nations showed on Friday. As New York City hotel rooms reach record nightly rates, city lawmakers are proposing a bill that would walk back some restrictions on hosts of Airbnb properties and other short-term rentals. German industrial production fell again in October as the sector continued to struggle, with swathes of layoffs and potential trade tariffs threatening to compound the problem. The head of South Korea’s ruling party suggested the country’s president could move again to declare martial law , as the embattled Yoon Suk Yeol sees support wane. Hong Kong has seen a pickup in fundraising this year even amid a slump in initial public offerings globally, but there’s some skepticism over whether that can be sustained. Estimated global insured losses from natural catastrophes like hurricanes and floods are on track to exceed $135 billion in 2024, according to a report from the The Grand Sunny is part of an armada of hundreds of ships that form what the industry refers to as the “shadow fleet.” They are old and poorly serviced vessels used to skirt sanctions on Russian, Iranian and Venezuelan oil and other cargoes. Executive Insights

Here is our weekly roundup of stories from across WSJ Pro that we think you’ll find useful.

Amazon is launching a supercomputer and server made up of its own silicon, diving headfirst into the artificial-intelligence chips race. The marketing alchemist who saved Crocs and Stanley faces his next branding challenge : HeyDude loafers. Direct lenders, often saviors to private-equity portfolio companies, are turning feisty to get repaid . They’re playing boardroom hardball and wresting control of troubled companies. The East Coast’s busiest port is looking for a bigger payday from surging ocean trade and the richer real-estate deals for maritime properties. About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to [vicky.huang@wsj.com].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

12-06-24 0716ET