US jobs day [Video]

The selloff in British gilts and the pound slowed yesterday after Rachel Reeves compromised on her spending plans but the pound, as other major currencies, remain under a decent selling pressure into the US jobs data due later today.

Before the announcement of the US official jobs data, activity on Fed funds futures suggests that the Fed’s next rate cut should arrive in May – with around a 53% chance. A set of stronger-than-expected data could flip this expectation to the ‘no cut until June’ side very rapidly and enhance the selloff in the US dollar and support a further appreciation of the US dollar, while a set of softer-than-expected jobs data could strengthen the hope of a May cut. Given how quickly the Fed hawks have gained ground in recent weeks—and how much more investors are excited by dovish signals—the market’s reaction to soft data could outweigh its response to strong figures.

On the flip side of the world, the Chinese struggle with a completely different problem. Despite the announcement of multitude stimulus measures, yields there continue to dive, and the gap between the US and Chinese yields are widening *alarmingly*.