Short Comment
Non-farm payroll announced at last Friday was surprising the markets. The expected number was 160,000, but the real number was 224,000. The number higher than expected is disappointing the participants.
Some participants had expected the down of 50bp in Federal Funds Rate in the meeting of coming July, but their expectation was broken with the index better than expected. Now, the major prediction about the policy is the down of 25bp in the coming meeting.
Asian markets are returning the recent recovery based on the former expectation. Today, Asian markets were plunging: NIKKEI225 -0.98%, HangSeng -1.54%, KOSPI200 -2.11%.
However, the impact will be limited as temporary effect for just Asian markets. Whether Federal Reserve lowers the policy rate by 50bp or 25bp on July, the total number of the down would be the same for this year. In fact, economic indices in the US are good enough, which does not need the down of the policy rate yet. Yield of 10year US T-Note is already around 2%, and it is low enough to support the stock market.
Mike Wilson, Strategist in Morgan Stanley, suggested Bearish market for the global stock market. His main grounds are weakening indices in the US. Economists in the bank lowered their expectation for economic growth of the US for second quarter this year from 1% to 0.6%. The research analysts in J.P.Morgan lowered the number of the expectation from 2.25% to 1%.
However, the number for economic situation of the US will be better than their expectation like it did for first quarter of this year. Even though they are right, the stock market do not follow the economic indices necessarily. The liquidity still is full in the markets, and it will support the US equities.
Non-farm payroll announced at last Friday was surprising the markets. The expected number was 160,000, but the real number was 224,000. The number higher than expected is disappointing the participants.
Some participants had expected the down of 50bp in Federal Funds Rate in the meeting of coming July, but their expectation was broken with the index better than expected. Now, the major prediction about the policy is the down of 25bp in the coming meeting.
Asian markets are returning the recent recovery based on the former expectation. Today, Asian markets were plunging: NIKKEI225 -0.98%, HangSeng -1.54%, KOSPI200 -2.11%.
However, the impact will be limited as temporary effect for just Asian markets. Whether Federal Reserve lowers the policy rate by 50bp or 25bp on July, the total number of the down would be the same for this year. In fact, economic indices in the US are good enough, which does not need the down of the policy rate yet. Yield of 10year US T-Note is already around 2%, and it is low enough to support the stock market.
Mike Wilson, Strategist in Morgan Stanley, suggested Bearish market for the global stock market. His main grounds are weakening indices in the US. Economists in the bank lowered their expectation for economic growth of the US for second quarter this year from 1% to 0.6%. The research analysts in J.P.Morgan lowered the number of the expectation from 2.25% to 1%.
However, the number for economic situation of the US will be better than their expectation like it did for first quarter of this year. Even though they are right, the stock market do not follow the economic indices necessarily. The liquidity still is full in the markets, and it will support the US equities.
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