Morning Meeting: U.S. Economy After Good Payrolls Report

Ethan Harris from Bank of America Merrill Lynch discusses the US economy following a positive jobs report. Despite a slowdown in job growth, the labor market remains healthy. Market reactions show equities rallying, but bond yields remain low due to global conditions. The bond market is disconnected from economic fundamentals, with low interest rates persisting. The US economy is experiencing slow growth, but inflation is expected to rise as full employment is reached. In the UK, Theresa May's potential leadership is seen as market-friendly, aiming for strong trade relations with Europe.

What was the general sentiment among economists regarding the US jobs report?

• Indifference to the report

• Concern over a new negative trend

• Panic about future job losses

• Relief due to a positive surprise

Why did the bond market not adjust despite the positive jobs report?

• It anticipated a significant Fed rate hike

• It was influenced by high US interest rates

• It was focused on domestic economic fundamentals

• It was affected by low and negative interest rates globally

What is the bond market's misconception according to Ethan Harris?

• The Fed will continuously lower rates

• The US has not reached full employment

• Inflation will remain low indefinitely

• The growth picture is overly optimistic

What is the expected impact of Theresa May's leadership on UK-EU trade relations?

• A market-friendly negotiated deal with the EU

• Strengthened trade relations with the US

• Increased tariffs on European goods

• A complete severance of trade ties

How did the markets react to the news of Theresa May becoming Prime Minister?

• Negatively, due to expected trade barriers

• Positively, due to expected stable negotiations

• Negatively, due to uncertainty

• Indifferently, as it had no impact