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Lower than Expected NFP Data Sparks Inflation Comments

On Friday, the 4th of June, the NFP data showed that 559,000 were jobs added, against a forecast of 650,000 jobs. Although the figure was slightly lower than expected, investors remained optimistic during Friday’s session.

Amid fears for inflation in the U.S., and with the employment figure below expectations, Treasury Secretary, and former Federal Reserve (Fed) Vice Chair Janet Yellen said that Joe Biden should continue with his $4 trillion spending plan. The Treasury Secretary believes that the excess inflation resulting from the stimulus will fade next year. In her opinion, “it would be a plus” for the economy and the Fed if the interest rates go higher.

For its part, the Fed – which injects $120 billion a month into the market – is waiting for inflation data scheduled to be released on Thursday this week. Fed Chairman Jerome Powell is not considering withdrawing support for the time being and has projected the key interest rate at close to zero until 2023.

On the commodities side, oil hit $70 a barrel for the first time since October 2018. At the time of writing, in this morning’s Asian session, WTI (West Texas Intermediate) was hovering around $69.30 a barrel. Gold was down 0.3% at $1886.04 per ounce.

The dollar and US Treasury yields rose. The S&P 500 hit a new record high on Friday on the back of the NFP data and in this morning’s Asian session the index was down 0.2%, at the time of writing.

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