US ‘no-land’ scenario lifts markets By Reuters

A look at the day ahead in European and global markets from Kevin Buckland

What a difference a payroll report makes.

From worries about a “hard landing” in the US economy, the debate has shifted to the potential for a so-called “no-go landing”, where the labor market continues to burn even as inflation cools.

The story is so compelling that it has completely absorbed the attention of traders and investors, even as Israeli bombs fell in Gaza and Lebanon on Monday’s one-year anniversary of the Hamas attack that started the war.

Asian shares picked up where Wall Street left off and led the charge with a 2% gain, getting further help from a much weaker yen.

The narrative of American exceptionalism, which was on shaky ground last month, stands – and the dollar king rests on its shoulders.

The yen, euro and sterling all fell, although the return to downside from the Japanese Finance Ministry helped lower the yen. Traders’ scars from Japan’s latest round of currency intervention may have begun to shake when top currency diplomat Atsushi Mimura said he was watching speculative moves “with a sense of urgency”.

Sterling, of course, was caught in the cross-current of a shock dovish reversal by Bank of England chief Andrew Bailey last week, which were then countered by BoE chief economist Huw Pill with less than 24 hours later.

The euro, however, continues to suffer this bearish sentiment as several ECB officials join their president, Christine Lagarde, in signaling a brisk pace of further easing. ECB policymaker Francois Villeroy de Galhau was the latest to say the central bank will “very likely” cut this month amid the risk of under-inflation.

There will be no shortage of additional central bank speakers on Monday.

ECB chief economist Philip Lane and board member Piero Cipollone are both giving speeches in Frankfurt, and colleagues Jose Luis Escriva is speaking in Madrid.

There is also a Eurogroup meeting in Luxembourg, which Lagarde is attending.

Outside the United States, we’ll hear Fedspeak from Governor Michelle Bowman and no less than three regional heads: Neel Kashkari of Minneapolis, Raphael Bostic of Atlanta, and Alberto Musalem of St. Louis.

Chicago Fed President Austan Goolsbee already had his say on Friday’s jobs data. In back-to-back interviews on Bloomberg and Yahoo! Finance, he called the numbers “gorgeous,” giving the Fed “both time and runway to figure out where the tipping point is.” He added, however, that rates still need to fall “a lot” from here.

Additional developments that could influence markets on Monday:

-German industrial orders, manufacturing, consumer goods (all August)

-Halifax UK House Prices (September)

-Retail sales in Italy, trade balance (both August)

-Sentix index in the euro area (Oct.), retail sales (Aug.)

(By Kevin Buckland; Editing by Edmund Klamann)