From rate-watchers to recession hawks, it’s all eyes on Friday’s US jobs report

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.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.4% yesterday on turnover of SAR 5.5 bn. The index is up 1.9% YTD.

In the green: Amiantit (+9.0%), Sasco (+7.6%) and Chemanol (+7.4%).

In the red: Raydan (-3.3%), Al Rajhi Reit (-2.5%) and Bupa Arabia (-2.3%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.4% yesterday on turnover of SAR 42.4 mn. The index is up 7.1% YTD.

In the green: Al Rashid Industrial (+21.4%), United Mining (+6.7%) and NGDC (+5.5%).

In the red: Al Modawat (-19.3%), WSM (-9.6%) and Lana (-7.5%).

CORPORATE ACTIONS-

#1- Acwa Power has appointed financial advisors for its capital increase: The renewables giant has tapped SNB Capital, Citigroup Saudi Arabia, and JP Morgan Saudi Arabia as its financial advisors for its SAR 7.1 bn capital increase via an issuance of shares, it said in a disclosure to Tadawul.

#2- Alkhabeer unitholders say yes to buyback: Unitholders of Alkhabeer Growth and Income Traded Fund have given the greenlight for the repurchase of up to 20 mn units — good for 20% of the fund’s units — for cancellation, according to a Tadawul disclosure.

#3- Albilad Capital will distribute SAR 295.6k in dividends to unitholders of Albilad Saudi Sovereign Sukuk ETF at SAR 0.029 per unit for August, according to a Tadawul disclosure.

#4- Bupa Arabia has completed the purchase of shares for its employee stock ownership program, it said in a disclosure to Tadawul. The company had announced the 860k share buyback in June which it said would be financed from its own resources.

#5- Jabal Omar draws closer to a capital hike: Jabal Omar Development has secured approval from the Capital Market Authority to increase its capital by way of converting a SAR 547.5 mn debt into equity, according to a news release. The move is still subject to shareholder approval and the completion of necessary regulatory procedures.

#6- The BoD of Gulf General Cooperative Ins. has called off plans for a SAR 300 mn capital hike through a rights issuance, it said in a disclosure to Tadawul.