U.S. Nonfarm Payrolls data turned out to be better than what the market had expected. There were 163k jobs added to the U.S. economy compared to 100k expected. However, June’s figure was revised down from 80k to 64k while the unemployment rate which was based on a different survey showed that the rate ticked up from 8.2% to 8.3%.
Earlier last week, the market had been disappointed by both the Federal Reserve and the European Central Bank’s decision which provided no fresh clues for investors. The Fed was expected to provide some new stimulus to re-boot the ailing (that’s what the pessimists have been saying for some time) U.S. economy while the ECB was expected to deliver a decisive action – or at least, a plan – to save the euro zone from the current crisis.
Somehow, the market suddenly forgot the ‘ailing U.S. economy’ when the payrolls data was released as the Dow soared over 200 points. European stocks were also turning higher after the released NFP data, suddenly forgetting the impending doom of euro should the crisis resolution remains uncertain. After all, all eyes look on ECB as euro’s sole salvation. The ECB itself seems to be tossing the role towards the respective European governments such as Germany (as the key decision maker), and the troubled Spain, Italy, Portugal, Ireland and Greece (as the ‘trouble-makers’).
As a personal opinion, I believe that the ECB should keep its primary duty of ensuring price stability instead of intervening in the bond market. Discipline should be applied on these troubled countries, especially on capping their spending to prevent excessive and unnecessary deficits. In the short-run, many will protest and get themselves upset, but in the long-run, a successful application of austerity program will definitely benefit the euro as a whole.
The portfolio slipped 1.57% on Friday, but this Monday the outlook seems to be okay so far.
Unfortunately, how long the payrolls euphoria will last? Once the market realizes that the bigger problem is in Europe, stocks may start heading south again…
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