This coming Friday’s US payroll data will be very closely watched by folks looking for data points that build the case for the US Federal Reserve to start cutting interest rates when it meets later this month, the Financial Times reports. Economists think the US economy added 163k jobs in August, and with Fed boss Jay Powell’s emphasis on the risks of a weaker labor market, “payrolls are going to be a huge number for the markets as well as the Fed,” Kevin Flanagan, head of fixed income strategy at WisdomTree told the salmon-colored paper.

REMEMBER- Powell has signaled that “the time has come for policy to adjust,” citing cooling inflation and slowing job growth as he foreshadowed a rate cut this month.

Pundits see the Fed going for a 25 bps rate cut, with a 30% chance of a deeper reduction, according to the CME’s FedWatch tool. However, softer labor data could result in a 50 bps rate cut, according to brokerage FP Markets.

Weaker data could reignite recession fears: July’s data of only 114k new jobs fell substantially short of the 175k new jobs forecast, helping spark a global market sell-off. A softer August labor figure could stoke fears of a sharper economic slowdown — and tip the scales towards a 50 bps rate.

Some beg to differ: Despite expectations of lower payroll data, some economists are on the fence about whether it will opt for the higher rate cut. “Non-farm payroll growth from April 2023 to March 2024 looks to be softer than first thought, but not worryingly so. That supports our view that when the Fed cuts interest rates it will do so in 25bp [basis points] steps, rather than a larger 50 bps cut,” North America economist at Capital Economics Olivia Cross wrote in a note to investors, The Guardian reports.

CIRCLE YOUR CALENDAR- The Fed’s Open Markets Committee is next set to meet 17-18 September.

EGX30

30,903

+0.4% (YTD: +24.1%)

USD (CBE)

Buy 48.50

Sell 48.64

USD (CIB)

Buy 48.53

Sell 48.63

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

12,189

+0.4% (YTD: +1.9%)

ADX

9,285

+0.6% (YTD: -3.1%)

DFM

4,325

-0.2% (YTD: +6.5%)

S&P 500

5,648

+1.0% (YTD: +18.4%)

FTSE 100

8,377

0.0% (YTD: +8.3%)

Euro Stoxx 50

4,958

-0.2% (YTD: +9.7%)

Brent crude

USD 76.93

-2.4%

Natural gas (Nymex)

USD 2.13

+0.5%

Gold

USD 2,527.60

-1.3%

BTC

USD 58,432.20

-0.9% (YTD: +38.3%)

THE CLOSING BELL-

The EGX30 rose 0.4% at yesterday’s close on turnover of EGP 5.9 bn (54.9% above the 90-day average). Regional investors were the sole net buyers. The index is up 24.1% YTD.

In the green: Palm Hills Development (+8.2%), Abu Qir Fertilizers (+5.0%), and Beltone Holding (+4.0%).

In the red: Ezz Steel (-4.3%), Cleopatra Hospitals (-2.4%), and ADIB (-1.3%).

CORPORATE ACTIONS-

#1- City Lab now has until 15 September to complete its fair value study of acquisition target Cairo Clinical Labs, according to an EGX disclosure (pdf). In July, City Lab appointed the Financial Advice Corporate Transactions (FACT) as independent financial advisor to provide a second opinion on Cairo Clinical Labs.

#2- Sidi Kerir Petrochemicals is increasing its issued and paid-up capital to EGP 1.8 bn from EGP 1.5 bn after its extraordinary general assembly greenlit the move, according to an EGX disclosure (pdf).

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