US Economics – Labour markets on track
The US added 227k jobs in November, in line with expectations of 220k, as employees returned from strikes and weather normalised. The unemployment rate rose by 0.1% to 4.2%, as the household survey showed continued weakness. The bounce-back in jobs was not enough to sway markets away from a December cut, now priced at 80%.
ECB – Dovish 25
The ECB will likely cut rates by 25 basis points to 3% and remove the tightening bias from their guidance. There has been no momentum among ECB council members to cut by more, despite weaker PMIs and slowing services inflation, and so the market prices <10% odds of a 50 basis points cut. The new forecasts will likely show lower inflation for 2024/25, and weaker growth for 2025/26.
France – No confidence
Last week Barnier lost the no confidence vote after he tried to push through a new budget without parliamentary approval. From here, the outgoing parliament remains in place with limited powers while Macron needs to find a new prime minister. There are no obvious candidates, and it previously took two months for Macron to select Barnier, so French noise may move to the background. Following the collapse of the government, French government bond spreads to Germany fell from highs of 0.88% to 0.76%.
Algebris Investments’ Global Credit Team
For more information about Algebris and its products, or to be added to our distribution lists, please contact Investor Relations at algebrisIR@algebris.com. Visit Algebris Insights for past commentaries.
Any opinion expressed is that of Algebris, is not a statement of fact, is subject to change and does not constitute investment advice.
No reliance may be placed for any purpose on the information and opinions contained in this document or their accuracy or completeness. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this document by any of Algebris Investments, its members, employees or affiliates and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions.
© Algebris Investments. Algebris Investments is the trading name for the Algebris Group.
