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Contents 02 US: Employment Data See-Saw Unlike July, which brought a huge miss to the downside and an equally large downward revision, August came with a headline beat on the headline and an upward revision to the prior two months.

03 UK: Gilt Shock Higher gilt yields are squeezing the government’s fiscal headroom and weakening housing demand through higher mortgage rates.

04 Australia: A Hike This Month? GDP data offered mixed evidence of the economy slowing. We now see the RBA hiking the cash rate target to a post-pandemic high of 4.60% this month.

Spotlight on Next Week ECB set to hike again. US inflation data to decide Fed’s next move. Japan’s Q2 GDP to be revised up marginally.

Contact Simona Mocuta Amy Le Chief Economist Macro-Investment Strategist

Information Classification: General

Weekly Highlights US employment rebounds, Iran war tensions intensify anew.

US: Non-farm Payrolls US: Unemployment US: ISM Services Index (Aug) Rate (Aug) (Aug)

162k 4.1% 55.4 Much better than expected Steady, wage inflation eased. Intensifying price pressures.

CA: Unemployment UK: Mortgage UK: Services PMI (Aug, Rate (Aug) Approvals (Jul, thous) final)

6.4% 56k 52.5 Held steady. Weakening. Below expectations.

JP: Mfg. PMI (Aug, final) JP: Household AU: GDP (Q2, q/q) Spending (Jul, y/y)

54.9 3.5% 0.4% Third highest in the world. Signal? Mixed data.

US: Employment Data The employment update for August was the mirror image of July’s and a reminder See-Saw that no single data point should be relied on too heavily when constructing the macro narrative. Unlike July, which brought a huge miss to the downside and an equally large downward revision, August came with a headline beat on the headline and an upward revision to the prior two months. Best to take these two reports and average them rather than look at each individually. This is what the August numbers showed: the economy added 162k jobs (Bloomberg consensus anticipated 55k) and the prior two months were revised upward by a cumulative 55k. Goods producing sectors added 41k jobs, while private service industries added 86k. The pickup in goods services employment is notable, as is its growing relative contribution to overall employment gains. It seems unlikely to us that the pace of this improvement can be sustained, but time will tell. Within services, performance was mixed. There were job losses in financial services (-11k) and information (-23k) that partly offset an unexpectedly large gain in leisure and hospitality (+62k). Government employment rose by 35k, mostly in the state and local space. The participation rate picked up two tenths, but the unemployment rate held steady at 4.1%, which is simultaneously good news and a bit puzzling insofar as this combo hints at potential data issues. On one hand, we had been looking for an increase in the participation rate given how rapid and severe the recent downshift

Information Classification: General