Rise and shine everyone… and Happy Friday!
It’s a big day with the US Job Report being released on 8:30am ET. All eyes are on this report today because the market sees this as a major data point that will determine whether the Fed will hike in November. In the last Summary of Economic Projections released in September, the Fed lowered the Unemployment Rate forecast to 3.8%. That’s where we were at for August. So, coming in higher than that would likely confirm a Fed hike at this point. That would send yields higher (or at least keep them elevated) and put pressure on equities.
Here’s a summary of forecasts for the September payroll report from some of the big banks. And yes, the revisions in the last few months have meant that none of the preliminary numbers matter as much. But, the market still moves on the release and we will continue to track them.
Typically, we would need to see 150K on the NFP for the unemployment rate to trend higher from here. With the revisions, we’re likely going to reach that level.
US Equity Futures are marginally higher even with bond yields trading higher. The Yield Curve has steepened further to -0.299%. We have see it cross into this territory since the Bank Crisis in March. Gold, and the US Dollar remain flat while Oil trades lower to $82.40, but recovering slightly off its lows. Bitcoin is trading higher crossing 27660.
Asia and Australia
Asian equities mixed Friday. Hang Seng outperformed amid strong gains in property and tech stocks. Mainland China remains closed. Nikkei logged mild losses. ASX and South Korea recorded moderated gains. Taiwan higher. Southeast Asia mixed. India trading higher.
Reserve Bank of India left their interest rate unchanged at 6.5% and their Cash Reserve Ratio at 4.5%. Governor Shaktikanta Das said monetary policy focus remains to align inflation at 4% target.
Important data coming out of Japan today. Real wages and Household consumption are still quite below the level that BoJ wants to see to make a revision to monetary. These have been the numbers most watched by the BoJ.
Nominal average wages rose 1.1% YoY in August, compared to consensus 1.5%, following revised 1.1% in the previous month. Real wages fell 2.5%, little changed from a revised 2.7% slide in July and remaining negative for the 17th straight month.
August household spending fell 2.5% YoY, better than expectations of a 3.9% decline and follows prior month's 5.0% drop.
US banks including Citigroup and JPMorgan have raised China GDP growth projections to 5% this year, following a series of downgrades, on the back of recent stronger data.
Europe, Middle East, Africa
European equity markets firmer. Financials the best performers across the board (Banks, Financial Services and Insurers). Food & Beverage under pressure with latest downside chalked up to risks from changing food consumption patterns due to the usage of anti-obesity drugs such as Wegovy, flagged in the US by Walmart this week.
Banque de France chief Villeroy, a moderate dove on the ECB Governing Council, said good figures on inflation and sharp rise in long term borrowing costs suggest no need for further rate hikes at present.
German factory orders rebounded in August by 3.9% MoM versus consensus for a 1.8% increase after prior -11.3% drop. This is quite a good outcome. The strong increase in incoming orders was in data processing equipment, electronic and optical products (+37.9% compared to the previous month). Increases in orders in manufacture of electrical equipment (+8.7%) and in the pharmaceutical industry (+4.0%) also had a positive impact.
UK Halifax house price data showed 0.4% MoM fall in August versus consensus for 0.8% drop and prior 1.8% fall revised up from 1.9% initially reported. Left yYoY prices down 4.7% versus consensus 5.0% and prior 4.5% drop revised up from 4.6%. We will get official mortgage rates from the UK today. Mortgage rates have been steadily rising with the last reading at 7.93%. It will be interesting to see what happens after the recent pause.
Tesla cut the price of some Model 3 and Model Y versions in the U.S. after the company reported third-quarter deliveries that missed market expectations. The starting price for the Model 3 is listed at $38,990 on Tesla’s website, down from $40,240 previously.
TSMC revenues slid a less-than-projected 11% after AI demand offsets sagging smartphone and laptop chip sales.
SEC looks to force Elon Musk to testify in probe of Twitter stock purchases.
(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)