Today’s Trading Playbook
KEY THEMES
It’s the first day back to school! If you do not know what this is this; it means streets are jammed, and it sure gave everyone hard time getting to their offices. However, global markets were just as fuzzy following the latest U.S. jobs report.
The September’s U.S. jobs report came short of expectation when it comes to jobs’ creation. The U.S. economy created only 194,000 jobs during September vs. expectations of c.500,000 jobs. Meanwhile, labor participation also fell. Such weak report made some people believe that the Fed tapering could wittiness some delay. However, U.S. equities ended Friday on a flattish note, as the market came to its senses, not ruling out the possibility a gradual tapering at the most imminent window. We note that, the yield on the U.S. 10 year Treasury upped 8bps between Thursday and Friday. The situation with rallying energy prices, alongside other commodities, when added to weak jobs data launched a wide argument about the future of global inflation, and the likelihood of getting a global stagflation narrative.
Here at home, the government’s fuel pricing committee raised the price at the nation’s pumps by EGP 0.25/ liter on Friday in response to spiraling international costs. The price for diesel remained unchanged to minimize the impact on the prices of fuel and food. This is the third consecutive hike, following the hike that took place in this year's summer. This, for sure, will add layers to the local inflation story. Just this morning, annual urban inflation figures for September were released, scoring 6.6%, above our expectations of 6.2%. We note that, annual urban inflation was 5.7% in August. This will make the CBE more vigilant in anticipation of inflation approaching the upper limit of its target (i.e. 9%).
Now, on to the top news and analysis for the day.