Daily Market Outlook, August 10, 2027
Daily Market Outlook, August 10, 2027
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Missive - Jobs Relief Lifts Stocks As Oil Clouds Fed Outlook
Global equities are starting the week close to record levels, helped by softer US labour data that reduced fears of an imminent Fed hike. But the relief is incomplete. Oil is still climbing as the US-Iran impasse over the Strait of Hormuz drags on, the yen’s post-payrolls bounce has faded, and this week’s US CPI report matters more for policy than Friday’s jobs surprise. The market has a growth-friendly payrolls print in hand, but it still needs inflation to cooperate.
The MSCI All Country World Index rose 0.1%, marking its seventh gain in eight sessions and keeping global equities near record highs. Asia followed Wall Street’s lead, with MSCI’s regional index up 0.4% after Friday’s rally pushed the S&P 500 to a new record. US futures point to modest additional gains, while European equities are set for a flatter open.
The equity message is straightforward: softer labour data has lowered the perceived risk of an immediate Fed hike. Friday’s employment report was weak enough to ease policy fears, but not yet weak enough to trigger a broader growth scare. That is the sweet spot equities like — slower hiring, lower front-end yields, and still-resilient earnings momentum.
Treasuries gave back a small part of Friday’s rally. The 10-year yield rose 1bp to 4.66%, while the 2-year yield also ticked up 1bp to 4.20% after falling as much as 9bps immediately after the payrolls release. The 2-year ended Friday around 5bps lower at 4.19%, its largest weekly decline since May. The move suggests markets have trimmed near-term hike risk, but not abandoned the idea that rates may need to stay restrictive.
The dollar strengthened against most G10 peers as yields edged higher and oil risks supported a firmer safe-haven tone. The yen remains under particular pressure. USD/JPY is back above 158, around 158.30, having retraced much of its post-payrolls advance. That is roughly a 1% move in favour of the dollar from Friday’s extreme.
This is notable because the BoJ summary of the July meeting included a comment that the pace of policy-rate hikes may need to be faster than markets expect. Normally, that sort of language should support the yen. But the broader fundamentals — wide yield differentials, higher oil import costs and fading intervention effects — continue to dominate. Intervention can jolt the market, but without sustained policy or yield support, the yen keeps drifting back toward pressure points.
Oil remains the key macro complication. Brent is around $84/bbl, up roughly 0.5% on the day and more than 5% over the last three sessions. The US-Iran stalemate over reopening the Strait of Hormuz continues, with Iran restating demands that are unlikely to win US approval. President Trump said the US is “low-keying it,” suggesting the diplomatic freeze may persist rather than escalate immediately.
Regional risks are also building. The Houthis struck a Saudi refinery, adding to the sense that Middle East supply risks are not confined to Hormuz alone. That helps explain why oil has risen despite Friday’s softer US labour-market data. The energy market is no longer pricing an easy reopening; it is rebuilding risk premium around a prolonged, messy stalemate.
For the Fed, this matters because lower payrolls do not fully offset higher energy prices. A softer labour market can reduce demand-led inflation pressure, but oil spikes feed quickly into headline CPI, gasoline prices, household inflation expectations and political pressure. That is why this week’s CPI report is likely to matter more than Friday’s jobs data for the near-term policy debate.
Gold held near $4,340/oz after last week’s extraordinary 7.3% rally, its best weekly performance since January. The metal is being supported by a mix of lower near-term Fed hike expectations, geopolitical risk and ongoing concerns about currency volatility. Its ability to hold gains despite a firmer dollar shows that safe-haven and inflation-hedge demand remain strong.
Friday’s US employment report creates a more nuanced Fed picture than the headline suggests. The eye-catching detail was a 23k drop in employment, which naturally points to cooling. But the more troubling issue is participation. The participation rate is down a full percentage point so far this year. If people are moving from employment into inactivity, that does not create the same kind of labour-market slack as a rise in unemployment driven by active jobseekers.
That distinction is important. A fall in employment accompanied by lower participation may reduce output potential as much as demand. It does not necessarily put downward pressure on wages in the way the Fed would normally expect from a weaker labour market. In other words, fewer people working is not automatically disinflationary if the labour supply is shrinking too.
The offsetting point is wages. Average earnings growth has moderated to 3.2% y/y, which is close to pre-pandemic rates. With some optimism around productivity gains, that pace is arguably compatible with the inflation target. Aggregate pay growth — average hourly earnings multiplied by total hours — is running at 3.9% y/y, below its post-GFC average. That suggests labour income is not generating excessive demand-led price pressure.
This is why the FOMC is likely to remain divided. Doves can point to weaker employment, slower wage growth and declining aggregate pay momentum. Hawks can point to falling participation, higher oil, sticky services prices and still-elevated spot inflation. Both sides have evidence, which is exactly what keeps policy uncertainty high.
China added another disinflationary note, though not a dramatic one. July CPI eased 0.5ppts to 0.5% y/y, while PPI fell 0.6ppts to 3.5% y/y, both missing expectations. However, core CPI declined only 0.1ppt to 0.9% y/y, suggesting much of the headline move was energy-related rather than broad-based weakness. China is still exporting some disinflation, but the underlying signal is less alarming than the headline figures imply.
In the UK, the KPMG/REC Report on Jobs improved to 50.0 in July. That is significant because it is the first time in almost four years that the permanent placements index has not signalled contraction. Broader employment indicators also improved in July, although survey evidence still points to an outlook below historical averages. The UK labour market may be stabilising, but it is not yet strong.
The week ahead is dominated by US CPI. After June’s softer print, markets need confirmation that disinflation is continuing. If headline inflation is pushed up by energy or if core prices fail to moderate, Friday’s payrolls relief could fade quickly. PPI, retail sales and the University of Michigan sentiment survey will then help determine whether higher gasoline prices are starting to affect inflation expectations and consumer behaviour.
Macro to Micro: risk assets still have momentum, but the story is less clean than Friday’s rally implied. Softer US jobs data reduced immediate Fed hike fears, and global equities remain near record highs. Yet Brent near $84/bbl, a weaker yen, Middle East tensions and this week’s CPI risk mean the Fed cannot shift its focus away from inflation. The market got labour relief; now it needs price relief.
Overnight Headlines
Trump To Axios: We Are Low-Keying It With Iran
Iran Rejects US Talks As Trump Displays Patience For Hormuz Deal
RBA Set For Hawkish Hold And Alert To Persistent Price Pressures
BoJ Summary Flags Upside Price Risks, Possible Faster Hike Pace
Japan Logs Current Account Surplus Of ¥17.43T In H1
Yen Underperforms G-10 Peers As Intervention Boost Fades
Dollar Near Two-Month Trough As US Inflation Data Awaited
Oil Rises On Uncertainty Over Reopening Of Hormuz
Wheat Hits Highest In A Week On Supply Disruptions In Black Sea
China Inflation Cools More Than Expected In July
Apple Tests China’s CXMT Memory Chips For iPhones, MacBooks
Sony, TSMC To Invest $6.3B In Advanced Image Sensor Plant In Kumamoto
Nvidia To Invest $3B In Blackstone-Backed Power Firm Behind Stargate
Westpac Profit Edges Up As CEO Flags Moderating Housing Market
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)
Monday 10/08
EUR/USD: 1.1640 (EU529m), 1.1575 (EU1.8bn), 1.1500 (EU1.1bn), 1.1450 (EU1.0bn), 1.1400 (EU679m)
USD/JPY: 156.00 ($676m)
USD/CAD: 1.4050 ($570m), 1.3920 ($510m)
AUD/USD: 0.7100 (AUD849m), 0.7025 (AUD717m)
Tuesday 11/08
EUR/USD: 1.1600 (EU968m), 1.1585 (EU769m), 1.1500 (EU671m), 1.1450 (EU1.2bn), 1.1440 (EU1.0bn), 1.1425 (EU592m)
USD/JPY: 157.00 ($545m)
CFTC Positions as of 7/7/26
Equity fund speculators raised their net short position in the S&P 500 CME by 32,299 contracts to a total of 319,577. Meanwhile, equity fund managers reduced their net long position by 2,008 contracts to 937,107.
Speculators also increased their net short positions in CBOT US 5-year Treasury futures by 179,319 contracts (totaling 1,325,719) and in CBOT US 10-year Treasury futures by 103,124 contracts (totaling 979,243). Conversely, they decreased their net short positions in CBOT US 2-year Treasury futures by 120,346 contracts (to 1,004,228), in CBOT US UltraBond Treasury futures by 5,723 contracts (to 314,985), and in CBOT US Treasury bonds futures by 41,225 contracts (to 176,272).
Bitcoin's net long position stands at 3,752 contracts.
The Swiss franc has a net short position of -32,822 contracts, the British pound -57,814 contracts, the euro -58,091 contracts, and the Japanese yen -45,473 contracts.
Technical & Trade Views
SP500 - 7620 weekly bull/bear level
Daily VWAP Bullish
Weekly VWAP Bullish
Above 7620 Target 7870
Below 7600 Target 7485
DXY - 99 weekly bull/bear level
Daily VWAP Bearish
Weekly VWAP Bearish
Above 99 Target 98
Below 99 Target 100
EURUSD - 1.1550 weekly bull/bear level
Daily VWAP Bullish
Weekly VWAP Bullish
Above 1.1550 Target 1.17
Below 1.1480 Target 1.1420
GBPUSD - 1.3450 weekly bull/bear level
Daily VWAP Bullish
Weekly VWAP Bullish
Above 1.3450 Target 1.3690
Below 1.34 Target 1.33
USDJPY - 160 weekly bull bear level
Daily VWAP Bullish
Weekly VWAP Bearish
Above 155 Target 160
Below 155 Target 152
XAUUSD - 4170 weekly bull bear level
Daily VWAP Bullish
Weekly VWAP Bullish
Above 4170 Target 4400
Below 3940 Target 3570
BTCUSD - 64k weekly bull bear level
Daily VWAP Bullish
Weekly VWAP Bullish
Above 64k Target 71k
Below 61k Target 52.2k
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% and 73% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!