US Payroll Figures

It is very positive for equities that they have reacted well to this surprisingly high payrolls number. The market seems to have latched on to the good news that the economy is in a decent state, rather than taking the negative view that this practically shuts the door on any more rate cuts for the foreseeable future.

This employment data reinforces the Federal Reserve’s view we heard on Wednesday, that inflationary risks are balancing those of an economic slump.

Despite sub-prime concerns being back under the spotlight as we hear of more write-downs by banks, the US consumer seems well-placed for an all-important fourth quarter. Those investors that were disappointed with a quarter point cut by the Fed this week may now re-assess their appraisal.

Nevertheless, the markets remain underpinned by a definite fragility and we are likely to see continued high volatility.