The goldilocks report

There's no such thing as a quiet week in the markets these days and this week has undoubtedly been no different.

The jobs report was always expected to be the highlight but the Bank of England gave it a good run for its money on Thursday, hiking by the most in 27 years while putting out some pretty dire economic forecasts. It would appear we have very little to look forward to for the next couple of years here in the UK.

While I believe other central banks are slowly gravitating toward the economic reality of soaring energy costs, high and widespread inflation, and rapidly rising interest rates, the BoE has very much been at the forefront of accepting the country's fate.

That's probably as much a reflection of the fundamental shortcomings as much as anything but the latest forecasts really were especially bleak and may make some other countries, particularly across Europe, a little nervous.

The US may already be in a technical recession, depending on your definition, but the economy is still in very good shape. The jobs report is expected to show that once more today, with 250,000 jobs forecast to have been added last month leaving the unemployment rate at 3.6%.

The question everyone is asking though is what constitutes an ideal jobs report. That may seem a silly question, but having drifted back into a “bad news is good news” environment where more rate hikes are to be feared as they may cause a recession but a recession is ok as it means potentially fewer rate hikes, it's no longer that straightforward.

With that in mind, perhaps the goldilocks report is one in which payrolls are strong but not overly so (so in line with forecasts), unemployment remains low but wage growth moderates a little. That would certainly fit the narrative of not a real recession while a slight moderation of wage growth could help build a case for inflation indicators easing, allowing for slower hikes into the end of the year.

Of course, there are many other factors at play but with oil 20% off its highs and supply chains improving, the Fed may feel that pressures are abating. Of course, a decline in the headline figure is what it ultimately wants to see and there'll be a couple of opportunities at that before the next meeting in September.

Oil slips below $90 as recession fears mount

Oil prices are marginally higher on Friday after spending most of the week on the decline. It hasn't been the most bullish week of headlines for crude, whether that be all of the recession chat (most notably from the UK), the new OPEC+ deal or the EIA inventory build. The headlines have all been negative and so the price has continued to fall.

WTI has broken below $90 to trade back at levels seen before the Russian invasion of Ukraine. Clearly, everyone is taking the threat of recession far more seriously as we're still seeing a very tight market and producers with no capacity to change that, barring a couple.

Gold eyeing $1,800 ahead of the jobs report

It's been another very good week for gold, despite Fed policymakers coming out in force to try and spoil the party. It seems traders are not particularly interested in being told that rates won't start falling towards the middle of next year or could still rise by 75 basis points in September despite the shift to data dependency. I mean, considering who's been right this past 12 months, I can hardly blame them. But gold has certainly benefited and the next challenge is $1,780-1,800 which is putting up quite the fight.

Bitcoin only gets a mild lift from the Blackrock deal

There was, what has become, a rare good news headline for bitcoin on Thursday after Coinbase was chosen to provide crypto services to Blackrock's clients. This is a big show of support for an asset class that's had a frankly terrible year so far. But clearly, there remains strong demand for cryptos which bodes well for the future.

In the near-term, it's not provided much of a lift which is perhaps a little surprising given how much the space has craved some more positive headlines recently but perhaps that's a sign of the environment. Bitcoin continues to trade around $23,000, with a break above $25,000 now the next big test to the upside.