Investors look towards the NFP jobs data for further evidence that the USA economic recovery is on a firm footing

Mar 7 • Morning Roll Call • 1936 Views • Comments Off on Investors look towards the NFP jobs data for further evidence that the USA economic recovery is on a firm footing

shutterstock_46939216As investors and FX speculators eagerly await the publication of the NFP jobs print on Friday they will have been encouraged by the two publications printed on Thursday. Firstly the weekly unemployment claims fell to 323K for the week and the rolling monthly figure came in down 2000. Similarly the Challenger jobs print, which lists planned layoffs, fell to 45K, down by just over 7%. Now these aren’t great job numbers but the general analysts’ belief is that they’re pointing in the right direction for the USA economy. As to how the NFP print will shadow this optimism is debatable. However, analysts are predicting a jobs print from NFP of 151K for the month.

In other USA news factory orders fell by 0.7% whilst the announcement from retailer Staples that it’s shutting over 225 of its stores came as a shock. The announcement comes two days after electronics retailer Radio Shack (RSH) announced plans to close up to 1,100 stores, or about 20% of its locations. Staples reported lower sales and earnings in its most recent quarter.

In other news both the MPC at the BoE and the ECB kept the base interest rates in the region static with no indication that any form of quantitative easing will be forthcoming via the ECB or the BoE MPC. In the ECB press conference Mario Draghi certainly played his cards close to his chest and gave no clues as to whether there would be a departure from the current policy. He did state that inflation is expected to rise gradually, therefore damping bets policy makers will introduce further monetary stimulus.

US Productivity and Costs

Nonfarm business sector labour productivity increased at a 1.8 percent annual rate during the fourth quarter of 2013, the U.S. Bureau of Labor Statistics reported today. The increase in productivity reflects increases of 3.4 percent in output and 1.6 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2012 to the fourth quarter of 2013, productivity increased 1.3 percent as output and hours worked rose 2.9 percent and 1.7 percent, respectively. (See table A.) Annual average productivity increased 0.5 percent from 2012 to 2013.

US unemployment insurance weekly claims report

In the week ending March 1, the advance figure for seasonally adjusted initial claims was 323,000, a decrease of 26,000 from the previous week’s revised figure of 349,000. The 4-week moving average was 336,500, a decrease of 2,000 from the previous week’s revised average of 338,500. The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending February 22, unchanged from the prior week’s revised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 22 was 2,907,000, a decrease of 8,000 from the preceding week’s revised level of 2,915,000. The 4-week moving .

February Announced Layoffs Fall to 41,835: Challenger

The pace of downsizing declined slightly in the second month of the new year, as U.S.-based employers announced plans to cut payrolls by 41,835 in February. The February total was 7.3 percent lower than the 45,107 job cuts employers announced to kick off 2014, according to the report Thursday from global outplacement consultancy Challenger, Gray & Christmas, Inc. The financial sector experienced the heaviest job-cut activity in February, with these institutions announcing plans to cut 9,791 workers in the coming weeks and months. That is about double the 4,817 job cuts announced by financial services firms in January.

ECB Monetary policy decisions

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.25%, 0.75% and 0.00% respectively. The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.

Market snapshot at 10:00 PM UK time

The DJIA closed up by 0.38%, the SPX reached another record high at 0.17% at 1877 and the NASDAQ down 0.13%. Euro STOXX closed up 0.27%, CAC up 0.59%, DAX up 0.01% and the UK FTSE up 0.19%.

The DJIA equity index future is up 0.36%, the SPX up 0.21% and the NASDAQ future down 0.15%. Euro STOXX future is up 0.29%, DAX up 0.04% and the CAC up 0.52% the FTSE up 0.19%.

NYMEX WTI oil finished the day up 0.49% at $101.95 per barrel NYMEX nat gas was up 2.70% at $4.64 per therm. COMEX gold finished the day up 0.76% at $1350 per ounce with silver up 1.07% at $21.45 per ounce.

Forex focus

The euro gained 0.9 percent to $1.3857 mid-afternoon in New York after rising to $1.3873, the highest level since Dec. 27th. The shared currency jumped 1.7 percent to 142.81 yen, the biggest advance since Sept. 19th. The yen slid 0.8 percent to 103.07 per dollar after tumbling to 103.17, the weakest since Jan. 29th. The euro rallied to a two-month high against the dollar after European Central Bank President Mario Draghi said inflation is expected to rise gradually, damping bets policy makers will introduce further monetary stimulus.

Australia’s dollar extended its daily winning streak to the longest since December after the Bureau of Statistics said exports exceeded imports by A$1.43 billion ($1.3 billion) in January, the most since August 2011. Retail sales increased 1.2 percent. The Aussie jumped 1.2 percent to 90.92 U.S. cents.

The loonie, as Canada’s currency is known appreciated 0.4 percent to C$1.0984 per U.S. dollar mid-afternoon in Toronto. It touched C$1.0956, the strongest since Feb. 19th, reaching beyond its 50-day moving average for the first time since October, a technical signal it may gain more. One loonie buys 91.04 U.S. cents.

Canada’s currency strengthened beyond C$1.10 per U.S. dollar for the first time in more than two weeks as building permits climbed more than forecast, adding to signs the global economy is picking up.

The pound slid 0.7 percent to 82.73 pence per euro late afternoon London time, the biggest decline since Feb. 3rd. The currency was little changed at $1.6738 after climbing to $1.6823 on Feb. 17th, the strongest since November 2009. The pound weakened the most in more than a month against the euro as European Central Bank President Mario Draghi raised forecasts for euro-area growth this year, boosting the relative allure of the shared currency.

Bonds briefing

Germany’s 10-year yield rose four basis points, or 0.04 percentage points, to 1.65 percent late afternoon London time after increasing to 1.67 percent, the highest since Feb. 25th. The 1.75 percent bund due in February 2024 fell 0.405, or 4.05 euros per 1,000-euro face amount, to 100.915. The rate on the nation’s two-year notes climbed four basis points 0.165 percent after rising to 0.17 percent, the highest level since Jan. 23rd.

Euro-area government bonds fell as European Central Bank President Mario Draghi damped speculation policy makers will cut interest rates and refrained from introducing new stimulus to boost the recovery.

The Treasury 10-year yield rose three basis points, or 0.03 percentage point, to 2.74 percent late afternoon in New York after touching 2.75 percent, the highest level since Feb. 25th. The price of the 2.75 percent note maturing in February 2024 fell 1/4, or $2.50 per $1,000 face value, to 100 5/32. Treasuries fell, pushing 10-year note yields to the highest level in a week, as fewer Americans than projected filed applications for jobless benefits last week in a sign the economy is picking up.

Fundamental policy decisions and high impact news events for March 7th

Friday we’ll witness the publication of Japan’s leading indicators, expected to show a print of 112.4%. Germany’s industrial production is expected to show a rise of 0.7% for the month.

Canada is predicted to show an increase of circa 17K in employment over the latest month with the unemployment rate at 7% and a trade balance of $1.6bn for the latest month.

The USA NFP data is expected in at 151K jobs for the month with the unemployment rate staying at 6.6%. The trade balance for the month is expected in down circa $40 bn for the month. Average hours worked is expected to show a 0.2% rise with the labour productivity up by 0.6% for the quarter. Consumer credit may have risen by $14.9 bn for the month. Finally on Friday FOMC member Dudley speaks.
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