Yesterday, US CPI data showed that inflation continues to cool down. But investors were trading carefully in pre-market, as they awaited non-farm payroll figures, which could influence the Fed's monetary policy.

According to Deutsche Bank, they were expected to slow to 200,000 in November from 261,000 in October. The unemployment rate was supposed to reach 3.6%.

But they came in much higher than expected. Stock futures dropped after the Bureau of Labor Statistics said non-farm payrolls increased 263,000 in November, while the unemployment rate stood at 3.7%. Some investors worry that high employment could fuel wage inflation and lead the Fed to remain hawkish for longer.

Today's monthly job report is the last one before the Federal Reserve’s Dec.14 meeting, when it is expected to announce a 50-bps rate hike.

Overall, investors seem to have found enough converging clues to judge that the Fed will ease its stance next year, which has reawakened their risk appetite. The new prevailing sentiment is that the US central bank has lowered its inflation alert level by one notch.

A feeling reinforced by macroeconomic statistics that have come to support the scenario. Along with good PCE inflation data, PMI activity indicators are in contraction territory. In the minds of investors, less inflation and slower economic activity are a sign that the central bank will be able to moderate the pace of its monetary tightening cycle. New York Fed boss John Williams did try to curb the prevailing optimism yesterday, but he didn't scare many people.

At the same time, the labor market shows little sign of weakening in the US and household consumption looks like it's holding up. So it could be that we end up with a soft economic landing, after all. That's on paper, of course, but it makes sense.

US 10-year debt was paying 3.54% this morning, up from 4.2% a month ago. So that means investors expect the rate spike to be lower than they had feared, which is a positive signal for equity markets. The same is true for the dollar, which has weakened significantly, although it did rise after the job report. The dollar index, which compares the U.S. currency to a basket of the world's most widely used currencies, was at its lowest since June. Again, this is a strong sign of what the market anticipates for US monetary policy.

Note also that OPEC+ will give indications on Sunday about its production policy in 2023, probably after the EU has decided on a price cap for Russian oil.

 

Economic highlights of the day:

November employment figures in the US are today's main indicator. All the macro agenda is here. 

The dollar is up 0.6% to EUR 0.9564 and GBP 0.8214. The ounce of gold is down to 1782 dollars. Oil is down slightly, with North Sea Brent at USD 86.34 per barrel and US WTI light crude at USD 80.63. The yield on 10-year US debt is falling to 3.54%. Bitcoin is trading around 16,900 dollars.

 

In corporate news:

* Blackstone announced plans Thursday to limit investor redemptions on its $69 billion Real Estate Income Trust (REIT), saying it had received too many requests, sending the stock down 7.1% in after-hours trading.

* Horizon Therapeutics - France's Sanofi said Friday that a potential bid for the U.S. biotech company, which is also in discussions with Amgen and Johnson & Johnson, would be cash-only.

* Marvell Technology fell 6.9% in premarket trading after reporting lower-than-expected quarterly earnings and sales.

* UiPath - The robotic automation specialist soared 10.2% in premarket trading after better-than-expected third-quarter results and an upward revision of its fourth-quarter revenue.

* AMC Networks - The media company behind "The Walking Dead" will take a $350 million to $475 million restructuring charge related to the elimination of about 20 percent of its workforce, according to a regulatory filing Thursday.

 

Analyst recommendations:

  • 4imprint: Berenberg upgrades from hold to buy targeting GBp 4800.
  • Associated British Foods: Goldman Sachs raised its recommendation to neutral from sell. PT up 20% to 1,900 pence.
  • Blackstone: Barclays downgrades to equal-weight from overweight. PT up 5.8% to $90.
  • BT Group: Citigroup downgraded to 1.30 pounds sterling from 1.85 pounds, keeping the neutral rating.
  • Coherent Corp: Stifel reinstated coverage of Coherent Corp. with a recommendation of buy. PT set to $48.
  • Ecolab: Barclays downgrades to equal-weight from overweight.
  • GSK: Citigroup lowered PT to 15.50 pounds sterling from 19.75 pounds and maintained the neutral rating. PT up 5.3% to $160.
  • J Sainsbury: Morgan Stanley resumes tracking at Underweight, targeting GBp 220.
  • Lam Research: Bernstein adjusts PT to $500 From $425, Maintains Outperform rating
  • Viavi: Stifel reinstated coverage with a recommendation of hold. PT up 5.6% to $12.