The official non-farm payrolls report was released this morning, showing 203,000 jobs added last month, beating expectations of a 180,000 gain. Unemployment was reported to have dropped to 7.0% from 7.3%, also beating expectations, For once, lower jobless numbers weren’t fueled by a drop in the labor participation rate.
The knee-jerk reaction was for precious metals to drop, the dollar to climb, and bond yields to jump. They all did so, but almost immediately corrected. Gold spiked downward to $1,210/oz, which sent shorts scrambling and shot the price up to $1,239/oz. The dollar, after a brief sharp climb, almost immediately settled back down to trend lines. Yields on the 10-year Treasury jumped to over 2.9% before easing slightly to 2.85%
Precious metals in general are settling back into the upper part of recent ranges. Sideways trading outside temporary shocks have been the norm for the last few months, with palladium outperforming the others to one degree or another. One factor that may be contributing to that is the unbelievable air pollution in major Chinese cities, with smog so thick in Shanghai today that it is literally off the charts. The pollution scale does not go as high as air pollution in Shanghai today. This is a global embarrassment for the Chinese government, which has pledged to enact new clean air laws. This points to increased demand for palladium, for both catalytic converters on new cars and industrial smokestack scrubbers.
Today’s non-farm payroll report was the last big U.S. economic report of the year. Watch for traders locking in profits and doing year-end portfolio adjustments through the end of the month being the main driver of markets through Christmas.
Other U.S economic news today showed that consumer spending rose 0.3%, up from multi-year lows in the third quarter. However, personal income dropped 0.1%, which means Americans were using credit cards to make those purchases. This may be reflected in consumer sentiment, which was recorded at a five-month high. Consumers are more comfortable with increasing their debt, as more people find work.