FTSE 250 (^FTMC)

What US jobs data, UK election mean for global rate cuts

Citi global equity strategist Beata Manthey joins Catalysts to discuss the state of the US economy and how global equities (^FTMC, ^FCHI, ^FTSE, ^SBF120) are reacting to the UK election results. Nonfarm payrolls exceeded expectations in June, as the US Bureau of Labor Statistics reported 206,000 new jobs added to the labor market against the expected 190,000. "Citi economists have been highlighting for quite some time this underlying weakness in the labor market, so under-the-surface weakness. And this is starting to play out and be visible in the in the coming data, especially today. And what that means is there is a silver lining. And Citi economists' view is that we are indeed going to get the first cut out of the Fed this coming September," Manthey explains. She adds that Citi economists are above consensus in anticipating three interest rate cuts for the year, starting in September. RSM chief economist Joe Brusuelas told Yahoo Finance earlier today that June's job data could play into encouraging the Federal Reserve to cut rates as early as July. As the UK Labour Party won the general election in a landslide, Manthey notes that the current state of the party is more business-friendly. She explains that for equities, "it's really going to play out number one through rate and number two through sterling [the British pound]." "Our view on the FTSE 100 (^FTSE) or MSCI UK, we are more bullish on other markets than this particular one. However, within the UK, our preferred election trade is FTSE 250 (^FTMC) versus 100, or small and medium-sized stocks versus large-size stocks, so they are more exposed to local economy. They are better positioned to benefit from the rate cuts that are coming through, perhaps as soon as August from [the] Bank of England. They are more exposed in a positive way to potential strength in the pound that we see in the short term." For more expert insight and the latest market action, click here to watch this full episode of Catalysts. This post was written by Melanie Riehl