IAIC Market Update - October 11, 2022

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• The announcement on Friday of strong U.S. jobs numbers continued to fuel expectations that the Federal Reserve Bank will maintain their current course of rate increases to slow inflation. 
• Total nonfarm payroll employment increased by 263,000 in September and the unemployment rate edged down to 3.5%. (Source) 
• The number of new jobs announced was below the number created in the last few months, but still relatively strong, especially as the headwind of increasing interest rates builds strength. 
• Wages are 5% higher than one year ago as gains continued in hospitality, healthcare, services, and manufacturing. (Source) 
• Also, on Friday Canadian employment figures for the same period were released. Although employment was only up slightly with 21,000 new jobs the unemployment rate fell 0.2% to 5.2% as labour force participation fell (fewer people searched for work). Employment in the public sector, education, and healthcare services rose as manufacturing, transportation and recreation fell. Average hourly wages have risen 5.2% over the past year, which helps offset some inflation impacts. (Source1, Source2) 
• The effects on markets had been building all week. Monday and Tuesday brought gains for North American equity indices, which were reversed as the jobs announcements approached. The prevailing opinion is that another large interest rate increase will be enacted by the Federal Reserve at their next meeting scheduled for the beginning of November. Higher interest rates and the resultant slowing economy are expected to lower corporate profits and have reduced stock prices across the indexes. (Source)
  

What’s ahead for this week?

• In Canada, after Thanksgiving on Monday a light week for economic announcements follows with manufacturing sales, motor vehicle and wholesales sales to be released.
• In the U.S., inflation will be in the news again with Consumer Price Index (CPI) and the Producer Price Index scheduled. The meeting minutes from the most recent Federal Open Market Committee meeting at the Federal Reserve will be released. The Import and Export Price Indexes will also be announced.
• Globally, the release of German and French CPI will continue the inflation parade of announcements. China will announce its imports, exports, and trade balance along with its consumer and producer inflation for September.