One thing that quite often puzzles people who do not work in financial markets is their tendency to treat seemingly good news as bad.
We got a classic example on Friday with news that US employers added 336,000 jobs in September.
That was up from 227,000 in August (a figure itself revised higher from the previous 187,000) and way ahead of the 170,000 Wall Street had been looking for.
The numbers were, in the jargon, very “hot”.
Good news? Well, yes, if you are one of the Americans who was able to move into employment during the month or switch to a better-paid role elsewhere.
So far as markets were concerned though, it was anything but good news.
The figures suggest that the US economy is continuing to motor, despite the fact that the US Federal Reserve has raised interest rates 11 times since March 2022 to combat inflation.
That, in turn, means that the Fed may have to resume rate hikes – having not done so since 27 July.
Image: Both the Bank of England, pictured, and US Federal Reserve held off on imposing interest rate hikes last month
Accordingly, yields – which rise as the price falls – on US Treasury bonds spiked higher.
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The yield on two-year notes jumped to as high as 4.847%, having closed on Thursday evening at 4.716%, while the yield on 10-year US Treasuries, which had been 4.716% on Thursday evening, jumped to as much as 4.858%.
Yields are now approaching the multi-year highs hit earlier this week as markets started to price in the possibility of interest rates remaining higher for longer – a process that got under way in earnest towards the end of September.
Hetal Mehta, head of economic research at the wealth manager St James’s Place, said: “Today’s payrolls print was punchy, with the monthly change nearly double what the market was expecting and the highest since January.
“When we zoom out, we can still see evidence of an improvement in the labour market imbalance, but today’s print underscores the slow progress; the US still has far more job openings than it has people looking for work.
“This is clearly inconsistent with what the Fed requires to get inflation down, let alone signal rate cuts.”
Image: Both the Bank of England, pictured, and US Federal Reserve held off on imposing interest rate hikes last month
Seema Shah, chief global strategist at Principal Asset Management, added: “The blowout jobs report is maybe not so good news for markets.
“Not only does today’s report indicate the economy is almost too hot to handle and the Fed will need to respond with more rate hikes, it reinforces the higher for longer narrative that has been spooking bond markets for the past few weeks.”
What was particularly curious about the September numbers was that it seemed perfectly reasonable to expect a slowdown in job creation.
The long-running actors and writers strikes in the TV and film industry has depressed hiring in those industries, while the three-week old strike action being taken by the United Auto Workers union against Ford, General Motors and Stellantis can be expected to have a similar impact on the car manufacturing and car parts sectors.
That may have been the case. But subdued activity in those sectors was more than made up for by renewed hiring in the leisure and hospitality sectors where nearly 100,000 jobs were created during the month – finally taking the numbers employed in bars and restaurants back to the levels seen before the pandemic.
Other sectors that added more jobs during the month included healthcare, where 41,000 jobs were created during the month, and transport. The expected uplift created by the start of the new school and college year also had an impact.
Image: A weakening currency makes imports more expensive, placing upwards pressure on inflation
The impact of the numbers was felt in other asset classes. The main equity indices on Wall Street fell at the open, while on the foreign exchange markets – where the US dollar this week hit 150 yen for the first time in a year and capped a record unbroken 12-week winning run against the euro – saw the greenback resume its upward path.
The pound, after a decent 48 hours, also fell against the greenback and remains close to the levels against the US dollar it hit last March.
Not all the data released today was necessarily bad.
Average hourly earnings growth during September was up 0.2% month on month and up 4.2% on a year-on-year basis, which was slightly lower than the 4.3% seen in August.
That looks good for consumer spending on the whole, but not sufficiently strong to worry the Fed, although the latter has been looking for annual earnings growth to return to pre-pandemic levels of 2% to 3%.
The other key revelation was that the labour force participation rate – the proportion of people of working age who are in work or looking for work – was 62.8%.
That helps explain why, contrary to expectations, the unemployment rate was unchanged at 3.8% – the highest since February 2022.
The market had been looking for a slight fall to 3.7%, but the fact that the rate was unchanged speaks to the fact that more Americans of working age are entering the jobs market. The Fed will take comfort from that because, when more people are looking for work, employers have to pay less to attract them.
These latter developments do point to the “soft landing” that markets have craved.
But the overall conclusion is that the US economy is still growing sufficiently rapidly – and the jobs market sufficiently robust – for the Fed to raise interest rates at least one more time before the end of the year.
A federal appeals court has ruled that Donald Trump’s sweeping international tariffs can remain in place for now, a day after three judges ruled the president exceeded his authority.
The Court of Appeals for the Federal Circuit (CAFC) has allowed the president to temporarily continue collecting tariffsunder emergency legislation while it considers the government’s appeal.
It comes after the Court of International Trade blocked the additional taxes on foreign-made goods after its three-judge panel ruled that the Constitution gives Congress the power to levy taxes and tariffs – not the president.
The judges also ruled Mr Trump exceeded his authority by invoking the 1977 International Emergency Economic Powers Act.
The CAFC said the lower trade court and the Trump administration must respond by 5 June and 9 June, respectively.
Trump calls trade court ‘backroom hustlers’
Posting on Truth Social, Mr Trump said the trade court’s ruling was a “horrible, Country threatening decision,” and said he hopes the Supreme Court would reverse it “QUICKLY and DECISIVELY”.
After calling into question the appointment of the three judges, and suggesting the ruling was based on “purely a hatred of ‘TRUMP’,” he added: “Backroom ‘hustlers’ must not be allowed to destroy our Nation!
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1:14
Trump asked about ‘taco trade’
“The horrific decision stated that I would have to get the approval of Congress for these Tariffs. In other words, hundreds of politicians would sit around D.C. for weeks, and even months, trying to come to a conclusion as to what to charge other Countries that are treating us unfairly.
“If allowed to stand, this would completely destroy Presidential Power — The Presidency would never be the same!”
Mr Trump argued he invoked the decades-old law to collect international tariffs because it was a “national emergency”.
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3:16
From April: ‘This is Liberation Day’
Tariffs ‘direct threat’ to business – Schwab
The trade court ruling marked the latest legal challenge to the tariffs, and related to a case brought on behalf of five small businesses that import goods from other countries.
Jeffrey Schwab, senior counsel for the Liberty Justice Center – a nonprofit representing the five firms – said the appeal court would ultimately agree that the tariffs posed “a direct threat to the very survival of these businesses”.
US treasury secretary Scott Bessent also told Fox News on Thursday that the initial ruling had not interfered with trade deal negotiations with partners.
He said that countries “are coming to us in good faith” and “we’ve seen no change in their attitude in the past 48 hours,” before saying he would meet with a Japanese delegation in Washington on Friday.
Harvard graduates have a lot to say. In a sign of the times, now isn’t the time to say it.
That much was clear when I sought student opinion at the gates of America’s oldest university. There is a reluctance to talk about Trump.
“He needs to come back to this country,” said a Harvard dad of his son, politely declining an interview on the youngster’s behalf.
The young man, British, falls into the category of international student – a vulnerable species, currently, in America’s elite university system.
For him, saying the ‘wrong’ thing carries the risk of an exclusion order to go with his graduation certificate. Dad knows best.
It is the modern reality at the gates of Harvard – this iconic seat of learning and crucible of free speech and ideas isn’t as free as it was. For now, at least.
It’s fair to say Harvard had other things on its mind this week, with Thursday’s ‘commencement’ day and graduation parades winding their route through surrounding streets in a ‘town and gown’ spectacle.
There were bagpipes and brass bands to lead students in their crowning moment. It was an emotional thank you and goodbye to Harvard, with a celebration soundtrack of music and ‘mwah’.
And yet, there was a political undercurrent. There has to be, when a US institution is at war with its president.
Some students wore a white flower on their lapel as a symbol of solidarity with Harvard’s international students.
Image: Harvard president Alan Garber said graduates came from ‘around the world, just as it should be’
In giving his speech at the podium, Harvard president Alan Garber was given a standing ovation when he noted that graduates hail from “around the world, just as it should be”.
As graduates and families gathered in Harvard Yard, the university’s defiance against Trump was playing out simultaneously in court, where the latest hearing took place on government efforts to stop the enrolment of foreign students.
Image: Donald Trump is ‘trying to crush us,’ Leo Gerden tells Sky News
Leo Gerden, a 22 year-old student from Sweden, was graduating in economics and government. We chatted while he stiffened himself with a Starbucks for the celebrations ahead.
What were his thoughts, as someone fitting the profile picked on by the government of his host country?
“I feel like the entire Harvard is under attack, because without its international students, Harvard is not Harvard anymore,” he said.
“He’s trying to crush us, but we have shown over the last couple of weeks that he won’t do that easily. The uncertainty itself is going to cause a lot of harm.
“People are definitely reconsidering their plans right now, whether it was coming to America, going to any university, because they might be next on Trump’s target list.”
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A former employee of Sean “Diddy” Combs broke down in tears as she described being sexually assaulted by the hip-hop star on several occasions – telling the court the alleged abuse was “the most traumatising, worst thing that’s ever happened to me”.
Image: Combs’s motherJanice Combs has been supporting him in court every day. Pic: Reuters
Mia told the court she once woke to find Combs on top of her and that he forced her to have sex against her will. Another time, he forced her to perform oral sex, she alleged.
He also once threw a bucket of ice on her head and slammed her arm into a door on another occasion, she said.
The court heard Mia had never told anyone about the alleged sexual assaults by Combs until she spoke to government investigators for this case.
“I was going to die with this,” she said, becoming tearful on the stand. “I didn’t want anyone to know ever.”
Telling the court she could not say “no” to her former boss, she said: “I knew his power. And his control. I didn’t want to lose everything that I worked so hard for.”
She also said she feared being attacked and was “always” worried about being physically hurt by Combs. “I didn’t want to die or get hurt.”
Mia said she felt “desperate”, “terrified and trapped” and described the alleged sexual assaults as “the most shameful thing of my life”, and “the most traumatising, worst thing that’s ever happened to me”.
Asked why she is speaking out now, she told the court: “Because I have to tell the truth.”
Image: Marc Agnifilo, one of Diddy’s defence lawyers, pictured outside court. Pic: Reuters/ Eduardo Munoz
‘Chaotic and toxic’
Mia, faltering at times, said working for Combs came with extreme highs and lows.
Sometimes he would offer advice and act like her “protector”, she said. Other times, he would “humiliate” her and berate her for small mistakes, and work her so hard she had little sleep, she said.
“It was chaotic. It was toxic,” she told the court.
Combs’s employees were always on edge because his mood could “change in a split second”, causing everything to go from “happy to chaotic”, she said.
Mia told how she was barely at home once she started working for Combs. Like other employees, she often slept at his properties in LA, Miami and New York.
She told the court she was not allowed to leave without his permission and was not allowed lock her door, even though it seemed as if other members of the predominantly male security staff were able to do so.
“This is my house. No one locks the doors,” Combs allegedly said to her.
On one occasion, Mia said she worked without sleeping for five days, with prescription drugs getting her through it. It was only when she had a physical breakdown that Combs allowed her to sleep, jurors were told.
Mia’s testimony echoed that of prior prosecution witnesses, including several of Combs’s other former employees, as well as Cassie.
Image: King Combs and Quincy Brown, two of Combs’s sons, were in court for today’s session. Pic: Reuters/ Eduardo Munoz
Cassie, an R’n’B singer and model whose legal name is Casandra Ventura, spoke for four days during the first week of the trial.
She told jurors her ex-partner subjected her to hundreds of “freak offs” – drug-fuelled marathons in which she said she engaged in sex acts with male sex workers while he watched and filmed them.
Mia is the second of three women testifying about alleged sexual abuse by Combs. The third woman, using the pseudonym “Jane”, is also expected to testify about participating in freak offs.
Combs has pleaded not guilty to charges of sex trafficking, racketeering conspiracy and transportation to engage in prostitution.
During their opening statement, his lawyers conceded he could be violent at times, but said that did not make him a sex trafficker or racketeering leader. Combs denies using threats or his music industry clout to commit or cover up abuse.
What did Mia say about Cassie?
Image: Cassie, who was heavily pregnant when she testified, has now given birth to her third child. Pic: Reuters/ Jane Rosenberg
In the first part of her testimony, Mia told the court she saw Combs beating Cassie on several occasions and that she sustained injuries, including black eyes, other bruises, and fat lips.
The two became friends, she said, and are still friends today.
Mia described a party at Prince’s house that she and Cassie “snuck out” to, saying Prince’s security had to intervene when Combs turned up and started to attack her.
She also described a trip to a private island in Turks and Caicos, in the Caribbean, saying she remembers Cassie being “terrified” as Combs banged on her door “screaming”.
On another occasion during that trip, they used paddle boards to go out to sea to get away from him, she said – but the weather changed and the sky turned dark.
“I was trying to weigh if it was scarier to face Mother Nature or go back to Puff,” Mia said, using the name she knew him by. “We eventually went back to Puff.”
Combs was also abusive to Cassie at the Cannes Film Festival in 2012, the court was told. Mia alleged she saw him digging his nails into her as they watched a film.
Mia’s testimony will continue when the trial resumes on Friday.