Focus on US employment data
Remarks / Observations
- Market focus on US non-farm payroll data for clues to the outlook for Fed policy.
- The Central Bank of India (RBI) left the repurchase rate unchanged at 4.00% (as expected). Maintain an accommodative stance for as long as necessary and as the recent fall in inflation left room for maneuver. Expanded its purchases of QE bonds in the following quarter.
- In Japan, household spending in April recorded its largest annual increase since 2001 (year-on-year: 13.0% vs. 8.7% e).
- Japan’s draft budget plan noted that the country must lay the groundwork for fiscal restoration by the time baby boomers turn 75. Must aim to meet the budget target keeping in mind that the fiscal state of Japan is in dire straits due to the pandemic response.
- The White House believed the Republicans were acting in good faith in infrastructure negotiations; waiting could close the gap with Republicans over time.
- GOP Senate leader McConnell said the party still hoped to come to an agreement with President Biden on a sig infrastructure package that was paid for in full.
- Williams of the Fed (FOMC voter) said it made sense for the Fed to consider what options it has going forward; at this time, we are nowhere near the “substantial further progress” marker that had been set. I didn’t think the time had come to act on bond purchases.
- The Fed’s Kaplan (non-voting; hawkish) said imbalances between supply and demand with materials and labor were a challenge.
Speakers / Fixed income / FX / Commodities / Erratum
- Indices [Stoxx600 -0.01% at 450.76, FTSE -0.26% at 7,046.07, DAX -0.02% at 15,629.80, CAC-40 -0.09% at 6,501.94, IBEX-35 -0.52% at 9,095.00, FTSE MIB +0.01% at 25,455.50, SMI 0.00% at 11,510.78, S&P 500 Futures -0.05%].
Market focal points / Key themes:
- European indices open mixed and have changed little, but tend to decline as markets awaiting US jobs report to reassess concerns over economic recovery; the best performing sectors include energy and consumer discretionary; technologies and finance leading to the downturn; on the corporate front, Vivendi in Paris is trading slightly lower after Pershing Square Tontine Holdings confirmed talks with Vivendi to acquire 10% stake in Universal Music Group for ~ $ 4 billion; in other news, AMS stock price climbed 3% in Zurich following Acuity Brands announcement to acquire OSRAM Digital Systems Business in North America; no profit is expected during the next US session.
- Consumer discretionary: Vivendi [VIV.FR] -1% (Pershing Square Tontine Holdings confirms the acquisition of 10% of the capital of UMG).
- Energy: Victoria Oil and Gas [VOG.UK] + 14% (corporate update).
- Health: AstraZeneca [AZN.UK] +1% (new CFO; test results).
- Technology: AMS [AMS.CH] + 2% (disposal), Fingerprint cards [FINGB.SE] -11% (withdrawal of prospects).
- SNB Chairman Jordan noted that: Monetary policy cannot replace government on climate change.
- The Italian Statistics Agency (Istat) raised its GDP growth forecast for 2021 from 4.0% to 4.7% and fixed 2022 growth at 4.4%.
- Central Bank of Turkey (CBRT) May Inflation Assessment Report: PPI continued to rise due to import prices and supply issues.
- Russia Dep PM Novak said Russia’s compliance on the OPEC + oil deal was close to 100% in May.
- The government of Taiwan has raised its GDP growth forecast for 2021 from 4.6% to 5.5%.
- Iranian Supreme Leader Khamenei has said he is looking to act and not just rhetoric about relaunching the 2015 nuclear deal.
Currency / Fixed Income
- The USD is hanging on to recent gains and multi-week highs following a series of better data. Market focus on US non-farm payroll data for clues to the outlook for Fed policy. Thursday’s initial jobless claims fell to another pandemic low and fueled concerns the Fed could act faster than expected to ease stimulus and tighten policy.
- EUR / USD holding above 1.21. Focus on next week’s ECB decision, where analysts expect the ECB to keep its buying pace unchanged under the Emergency Pandemic Purchase Program.
- (CZ) T1 Czech Average real monthly salary Y / Y: 1.0% vs. 1.7% e.
- (HU) Hungary Apr Retail sales Y / Y: 10.6% vs. 14.3% e.
- (DE) Germany May Construction PMI: 44.5 vs. 46.2 previously.
- (SE) Sweden Q1 Current account balance (SEK): 78.3 billion against 57.4 billion previously.
- (TH) Thailand’s foreign reserves at the end of May: $ 251.9 billion compared to $ 250.4 billion previously.
- (CN) Shanghai weekly copper inventories (SHFE): 201.7,000 against 207.8,000 tonnes previously.
- (TW) Taiwan Q1 Final GDP Y / Y: 8.9% vs. 8.2% e.
- (United Kingdom) May New registrations of Y / Y cars: 674.1% compared to 3,176.6% previously.
- (UK) Russia Narrow money supply with May 28 (RUB): 13.99 T against 14.07 T before.
- (TW) Taiwan’s May foreign reserves: $ 543.0 billion compared to $ 541.1 billion previously.
- (UK) May Construction PMI: 64.2 v 62.0e (4th month of expansion).
- (EU) Euro zone April retail sales M / M: -3.1% v -1.5% e; Y / Y: 23.9% against 25.0% e.
- (GR) Greece Q1 GDP Q / Q: 4.4% v 0.5% e; Y / Y: -2.3% against -6.9% previously; NSA GDP (unadjusted) Y / Y: -1.4% against -5.9% previously.
Issue of fixed income securities
- G7 Finance Ministers Meeting in London.
- (UK) Russia May Y / Y light car sales: not estimated vs. 290.4% previously.
- 05:20 (EU) Daily liquidity statistics from the ECB.
- 05:30 (ZA) South Africa will sell ZAR1.2B combined in I / L 2029, 2038 and 2050 bonds.
- 06:00 (IE) Ireland Q1 GDP Q / Q: No is v -5.1% before; Y / Y: No is v -1.5% before.
- 06:00 (IE) Ireland Q1 Current account balance: none is against 7.1 billion euros previously.
- 06:00 (IE) Ireland May Live Sign Up Monthly Change: No est v -3.5K before; Live recording level: none is v 181.8K before.
- 06:00 (UK) DMO to sell £ 3.0bn in 1-month, 3-month and 6-month bills (£ 0.5bn, £ 1.0bn and £ 1.5bn respectively ).
- 6:45 am (US) Daily Libor correction.
- 07:00 (MX) Mexico in May Vehicle production: no earlier version than version 269.2K; Vehicle Exports: No earlier version than 234.6K.
- 07:30 (TR) Turkey May Effective Exchange Rate (RRSP): No est v 62.29prior.
- 7:30 a.m. (IN) Weekly Forex Reserve in India with May 28: no estimate vs. $ 592.9 billion previously.
- 7:30 a.m. (IS) Iceland will sell 2024 and 2031 bonds.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:00 (IN) India announces next issue of invoices (Wednesday).
- 8:30 a.m. (United States) Possible change in non-farm payroll: + 674Ke vs. + 266K before; Change in manufacturing payroll: + 25Ke vs. -18K before.
- 8:30 am (United States) Unemployment rate: 5.9% compared to 6.1% previously; Underemployment rate: No is v 10.4% previously; Activity rate on the labor market: 61.8% compared to 61.7% before.
- 8:30 am (United States) Average hourly profit for May M / M: 0.2% ev 0.7% before; Y / Y: 1.6% ev 0.3% before; Average weekly hours: 34.9 ev 35.0 before.
- 8:30 am (CA) Canada May Net change in employment: -22.5K versus -207.1K before; Unemployment rate: 8.2% compared to 8.1% before; Full-time job change: No is v -129.4K before; Part-time job change: No is v -77.8K before; Participation rate: 64.8% compared to 64.9% before; Hourly wage rate: -1.5% ev -1.6% before.
- 08:30 (CA) Canada Q1 Labor productivity Q / Q: -0.9% ev -2.0% before.
- 8:30 a.m. (US) Weekly USDA Net Export Sales.
- 09:00 (BR) Brazil May PMI Services: No is v 42.9 before; P (EU) Euro zone Retail sales April H / M: -3.1% v -1.5% e; Y / Y: 23.9% against 25.0% e MI Composite: No est v 44.5 before.
- 10:00 am (US) Apr Factory orders: -0.3% ev + 1.1% forward; Factory orders (ex-transport): No is v 1.7% before.
- 10:00 (US) Apr Final durable goods orders: -1.3% ev -1.3% preliminary; Sustainable (excluding transport): 1.0% ev 1.0% preliminary; Orders of capital goods (excluding defense / excluding aircraft): 2.3% ev 2.3% preliminary; Shipments of capital goods (excluding defense / excluding aircraft): No est v 0.9% prelim.
- 10:00 (CA) Canada May Ivey Purchasing Managers Index (seasonal adjustment): No est v 60.6 prior; PMI (unadj): No is v 59.9 before.
- 11:00 am (EU) Potential sovereign ratings after the European close.
- 12:00 (UK) Russia Apr Real retail sales Y / Y: + 31.5% ev -3.4% before.
- 1:00 p.m. (US) Baker Hughes Platform Weekly Countdown.
- 1:00 p.m. (CO) Colombia May CPI H / M: 0.7% ev 0.6% before; Y / Y: 3.0% ev 2.0% before.
- 13:00 (CO) Colombia May CPI Core M / M: Not estimated against 0.3% before; Y / Y: No is v 1.6% before.