ON DECK FOR TUESDAY, JUNE 10
KEY POINTS:
- Markets treading carefully
- Weak UK labour market undermines cable, gilts rally outperforming
- BanRep could cut again on weaker inflation
- Softer Norwegian inflation drives lower yields
- Light N.A. calendar
Global markets are in a cautious mood so far this morning. Equities range from flat (US futures) to lower elsewhere. Sovereign bond yields are broadly lower and led by the UK after weak labour market readings and Norway after softer inflation. Otherwise light calendar-based risk is dominated by the focus on day two of US-China trade talks in London. There is nothing material ahead on the N.A. calendar, just US NFIB small business confidence to consider and the funny math behind Canadian defence spending.
UK JOB MARKET CONTINUES TO WEAKEN
The UK lost another 109,000 payroll positions last month on top of negative revisions that dragged April lower (-55k instead of -33k). Chart 1. Total employment lags at April, but was up by 36k and has been more resilient via smaller employers (chart 2). The unemployment rate ticked up to 4.6% in April. Wage growth ebbed to 5.2% y/y (chart 3). Job vacancies fell again (chart 4).
BANREP COULD CUT AGAIN AFTER WEAKER INFLATION
Colombia's core CPI inflation rate slipped to 5.1% y/y from 5.3% and was expected to be unchanged. That could embolden BanRep to cut again toward the end of the month.
SOFT CORE INFLATION DRIVES LOWER NORWEGIAN RATES
Norges Bank watchers got a softer than expected underlying CPI reading this morning. It decelerated to 2.8% y/y from 3.0% (2.9% consensus).
US SMALL BUSINESS OPTIMISM IMPROVES
The NFIB’s measure of small business optimism scored a three-point gain in May. The reading fell from December to April after soaring following the US election. It frankly still seems out of touch with reality as small businesses are more likely than larger ones to struggle in the face of tariffs and tighter immigration policies.
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