The United States has released non farm employment data for September. The result surprised global investors: in September, the number of new non farm employment in the United States reached 336000, significantly exceeding market expectations of 170000, almost twice the expected value! This is the highest growth rate since January this year and the second time this year that it has exceeded the 300000 mark. Such astonishing data caught the global market off guard.
US stocks, US bonds, and the US dollar have all experienced significant fluctuations. Especially the significant increase in US bond yields indicates a significant increase in market confidence in the US economy and a change in expectations for the Federal Reserve's monetary policy. The market generally believes that the Federal Reserve will announce a reduction in its asset purchase plan this month and may accelerate the pace of interest rate hikes next year. This is undoubtedly a significant impact and challenge for global financial markets.
1、 The reasons behind the US non farm employment data
In September, the infection rate and mortality rate of COVID-19 in the United States both declined, which indicates that the United States has made certain achievements in combating the COVID-19 epidemic and created more favorable conditions for economic recovery. In addition, US President Biden signed a temporary fiscal spending bill totaling $480 billion, avoiding the crisis of government shutdown and providing some support for the economy.
In addition, the Biden administration is also promoting a $3.5 trillion social welfare and infrastructure investment bill, as well as a $1.2 trillion traditional infrastructure investment bill, both of which are expected to pass Congress this month. If these bills can be smoothly implemented, they will bring greater stimulus and reform to the US economy, and also boost market and public confidence.
2、 The Dynamics and Risks of US Economic Recovery
As of October 9, the United States had received 416 million doses of COVID-19 vaccine. As the vaccination rate increases, the fear and concern of the American people about the epidemic will gradually decrease, thereby increasing their willingness and confidence to travel, consume, and work.
The Biden administration is promoting a series of large-scale fiscal expenditures and investment plans aimed at improving the living standards of the American people, increasing social welfare, improving infrastructure, and promoting green energy. If these plans can be successfully passed and implemented, they will bring long-term growth momentum to the US economy and enhance its advantage in global competition.
Although the market generally expects the Federal Reserve to announce a reduction in its asset purchase plan this month and may accelerate the pace of interest rate hikes next year, this does not mean that the Federal Reserve will immediately tighten monetary policy. Federal Reserve Chairman Powell stated in his latest monetary policy statement that the Federal Reserve still believes that current inflation is temporary and remains concerned about the inequality and inadequacy of the job market.
Although the epidemic in the United States improved in September, it cannot be taken lightly. The variation of COVID-19 is also a risk factor that cannot be ignored. If a new variety with more infectivity or lethality appears, it may affect the effectiveness and popularity of the vaccine, thus bringing greater obstacles and challenges to the economic recovery of the United States.
Although the Biden administration is promoting a series of large-scale fiscal expenditure and investment plans, these plans are not smooth sailing. These plans have been opposed or questioned by Republicans and some Democratic insiders in Congress, who believe that they are too large, expensive, impractical, or unnecessary, and may exacerbate issues such as fiscal deficits, inflationary pressures, and debt risks.
3、 The Impact and Enlightenment of the US Economic Recovery
The recovery of the US economy means that the attractiveness and competitiveness of the US financial market will increase, especially against the backdrop of the Federal Reserve's reduced asset purchase plan and expected interest rate hikes. Assets such as the US dollar, US stocks, and US bonds will be more favored, while assets such as currencies, stocks, and bonds from other countries or regions may face greater pressure and volatility.
On October 8th, after the release of non farm employment data, the US dollar index rose significantly, breaking the 94 mark and reaching a new high in over a year; There has been a divergence in the US stock market, with the Dow Jones and S&P 500 index slightly rising, while the Nasdaq index slightly falling; The yield of US Treasuries rose sharply. The yield of 10-year treasury bond bonds once exceeded 1.6%, a new high in five months.
However, assets such as currencies, stocks, and bonds in other major countries or regions have experienced varying degrees of decline or volatility. These changes indicate that global financial markets are readjusting their expectations for the US economy and monetary policy, and reallocating global assets. For some countries or regions that rely on external funds or trade, this may bring greater impacts and challenges.
The economic recovery in the United States also means that its contribution to global economic growth will increase, especially in areas such as consumer demand, service industry employment, and fiscal stimulus. This may bring more opportunities and benefits to countries or regions with close trade or investment ties with the United States.
The rebound in consumer demand in the United States has driven an increase in imports of goods and services from other countries or regions, thereby providing support for global trade and economic growth. The promotion of the US fiscal stimulus plan may also bring more opportunities and impetus for cooperation and investment in global infrastructure, green energy, digitization, and other fields. This may bring more benefits and influence to countries or regions with the ability and willingness to participate in these fields.
epilogue
The US non farm employment data for September significantly exceeded expectations, indicating a strong recovery momentum in the US economy. This is because the United States has made positive progress in epidemic control, consumer demand, employment in the service industry, and fiscal stimulus.
However, the US economy still faces uncertainties and challenges in areas such as the pandemic, inflation, finance, and politics. Whether the US economy can maintain the momentum of recovery depends on whether the US government and society can effectively address these issues, as well as whether the Federal Reserve can flexibly adjust monetary policy.