Speaking to CNBC-TV18 Tim Condon of ING Financial Markets said that the US non-farm payroll data might come in at about 170,000. He also added that anything less than the 180,000 will be considered negative by the market.
He doesn't expect the US Fed to hike rates anytime soon.
The world is largely becoming a place where a zero interest rate situation is not far off.
He is positive about the markets doing well. "As long as we are in this steady world of low growth, but steady growth, very low risk-free rates, we will see base effect supporting growth rates."
India, he thinks, will be an oupterfomer among emerging markets. India isn't depended on exports as some of the other markets are, he said.
Below is the transcript of Tim Condon’s interview to Reema Tendulkar and Nigel D’souza on CNBC-TV18.
Nigel: The big data point this evening is going to jobs report. What is your estimate of that particular number and what is your analysis of the commentary we have been getting in from the Fed in the last week or so?
A: To the matter of the jobs report tonight, we are looking for a bit lighter than the consensus. Something around 160,000-170,000. We think that anything that is below expected and below 180,000, will be taken negatively by the markets and sustain a risk off environment.
As far as the Fed, our take is that they are trying to back out of this idea that they are going to be raising rates. We have taken out any forecast of rate hikes in 2016 pushed them out to 2017 and we think that the Fed is trying to signal that there is enough uncertainty out there that rate hikes are not on the table for this year.
Reema: You said that any figure below that 180,000 for the June non-farm payrolls will be a disappointment and will result in risk off. Could you elaborate more on the kind of risk off we are likely to see in case the non-farm payroll does indeed disappoint?
A: It is pretty much what we have been seeing all year. So, it is probably US dollar positive, the rally in risk free assets will be sustained, US treasury yields move a little lower and meant positive for gold probably. Gold is having a great year and it does not look like anything at least in the near-term is going to upset that.
Nigel: You said that you are not factoring in any rate hikes coming from the Fed for the remainder of this year?
A: That is right. We have pushed out everything to 2017 and even in 2017, we are not looking for much. We have got one hike coming soon next year. So, what we think is happening is that the world is kind of moving to an appreciation of the Bullard St Louis Fed narrative which is one of very slow growth in the US economy and a world in which a zero short-term interest rate is not far off the normal and in that kind of a world, there is no urgency to hike rates and the long bond, the 10-year treasury note yield will remain historically very low.
Reema: What have you made of this two week rally that we have seen largely in the global market? I know this week we have seen a bit of a correction, but on the whole markets are back to the pre-Brexit levels overextended do you think in the near term, how we forecasting the equities to be in the next three months?
A: I am kind of positive in a sense that, the Brexit was obviously a shock. We have kind of gotten through that nicely as you point out and we are not looking for obviously shocks are impossible to predict, but as long as we are kind of in this steady kind of world of low growth, but steady and very, very low risk free rates. What we are going to see over the months to come is that the base effects will be supporting growth rates and boosting growth rate. By the end of this year or in early 2017 we will start to see the activity growth rate to turn positive begin and once people see that that the world is no longer contracting that we are growing albeit slowly will be a great sense of comfort and that will be positive for risky assets in my judgement.
Nigel: What is your take on India? You believe the Indian markets are going to outperform from emerging markets basket and in terms of your pecking order where does India come?
A: I am positive on India as an outperformer. The reason is India has the ability to generate domestic spending driven growth. This is a world in which exports are simply not there, export spending has slowed significantly, and exports are now growing much more slowly than total activity. India is not depending as most of the rest of Asia is on exports, so in my judgement from a macro point of view India looks well positioned to be able to benefit. The Indian markets are in a position to outperform, certainly comparably with most of the emerging markets space which is reliant on exports.