US Jan jobs data eyed for any re-pricing of Fed policy expectations

Notes/Observations

- Numerous Far East markets closed next week for Chinese New year holiday

- Pending release of China FX Reserves in focus for capital outflow implications

- US Payroll data eyed for signs of moderating economic momentum and any re-pricing of Fed policy expectations

 

Economic data

- (JP) Japan Dec Preliminary Leading Index CI: 102.0 v 102.7e; Coincident Index: 111.2 v 111.0e

- (DE) Germany Dec Factory Orders (miss) M/M: -0.7% v -0.5%e; Y/Y: -2.7% v -1.4%e

- (FR) France Dec Trade Balance: -€3.9B v -€4.4Be

- (CH) Swiss Jan Foreign Currency Reserves (CHF): 575.4B v 559.5B prior

- (SE) Sweden Dec Industrial Production M/M: -2.9% v -0.5%e; Y/Y: 0.3% v 3.5%e

- (NO) Norway Dec Manufacturing Production M/M: -0.3% v -0.6%e; Y/Y: -7.7% v -6.6% prior

- (RO) Romania Central Bank (NBR) leaves Interest Rate unchanged at 1.75% (as expected)

**Fixed Income Issuance:

- (ZA) South Africa sold total ZAR430M vs. ZAR650M indicated in 2033, 2046 and 2050 bonds

- (IN) India sold total INR140B vs. INR140B indicated in 2023, 2026, 2034 and 2044 bonds

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 +0.7% at 2,928, FTSE +0.8% at 5,943, DAX +0.3% at 9,420, CAC-40 +0.8% at 4,263, IBEX-35 +1.4% at 8,590, FTSE MIB +1.0% at 17,800, SMI +0.4% at 8036, S&P 500 Futures +0.3%]

Market Focal Points/Key Themes: Major European indices are currently trading up in the morning session after a mixed Asian session, as investors turn focus on the US Nonfarm payrolls later today; European indices were trading lower during the early morning session but erasing its losses on a jump in Brent and WTI prices. Financial stocks also trading higher in the morning session with notably BNP Paribas releasing Q4 results and raising their FY16 cost saving plan; FTSE being led on by the commodity stocks with Anglo American, Glencore and BHP Billiton leading the gains after being the laggard for most of the early morning session; upcoming notable US earnings include Aon, Estee Lauder, and Tyson Foods

 

Equities

- Energy: [BG Group BG.UK +1.0% (Q4 results)]

- Financials: [BNP Paribas BNP.FR +5.2% (Raises FY16 cost saving plans, Q4 results), Grainger GRI.UK +0.9% (To sell FRM portfolio and German Business for €124M)]

- Healthcare: [Fagron FAGR.BE -1.1% (FY15 results)]

- Industrials: [Palfinger PAL.AT +1.5% (FY15 results), Volvo VOLVA.SE +2.7% (Q4 results)]

- Materials: [ArcelorMittal MT.NL -6.1% (Q4 results), Umicore UMI.BE -1.1% (FY15 results)]

- Technology: [Wincor Nixdorf WIN.DE +0.4% (Diebold to commence voluntary public takeover for €38.98 in cash and 0.434 common shares)]

 

Speakers

- ECB's Jazbec (Slovenia): Reiterates view to review policy in March; need through analysis of data

- EU's Moscovici: European recovery was accelerating; France is likely to meet 2016 targets, but not 2017 objectives if no changes to budget were made

- Sweden FSA said to propose to raise the counter-cyclical buffer to 2% from March 2017

- Russia Econ Min Ulyukayev stated that country needed an additional RUB200B for anti-crisis measures. Considering tax on palm oil and harmful ingredients and to draft list of companies for privatization (stake sales) in coming days

- China State Council said to strictly control new capacity in the coal industry; plan to cut to 500N tons over next 3-5 years

 

Currencies

- The USD consolidated its recent losses ahead of the Jan Non-farm payroll data. Jobs will be eyed for signs of moderating economic momentum and any re-pricing of Fed policy expectations.

- EUR/USD consolidated its recent gains after posting roughly 4-month highs at 1.1238

- GBP/USD maintained a soft tone in the session after BoE's Broadbent confirmed yesterday's dovish message from the BOE Feb minutes and QIR press conference. GBP/USD test 1.4530 area

- The stronger JPY currency (yen) continued to weigh upon the Nikkei-225 Index.

**Fixed Income:

- Bund futures trade at 163.82 up 30 ticks ahead of Jan US jobs data later today. Analysts see 164.22 remaining as initial resistance with a break seeing 164.44 with follow through targeting 164.90 . Support moves to 163.71 gapfill then 163.29 followed by 163.08 gap fill with a break seeing 162.70 then 162.28.

- Gilt futures trade at 120.51 up 16 ticks consolidating after yesterdays 9-0 vote to keep rates on hold. Analysts look for a test of contract highs at 121.14 with a break targeting 121.50 then 121.98. Support moves to 120.37 gap fill follwed by 120.02 with a break seeing 119.76 initially followed by 119.58 with 119.34 to fill the gap.

- Friday's liquidity report showed Thursday's excess liquidity rose to €676.3B a rise of €4.1B from €672.2B prior. This was primarily due to AFs and MonPol portfolios falling to negative €264B the lowest on record. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility rose to €29M from a prior €266M.

- Corporate issuance continues to take a back seat due to volatile markets. Yesterday saw no notable issuance, although Schlumberger issued Euro denominated 3 year debt. This year has seen Friday's much more active, which could see a flurry of deals to close the week. Estimates for the month seen at around $85-100B.

**Political/In the Papers:

- (KR) North Korea reportedly might have started fueling a possible missile (**Note: On Feb 2nd South Korea said to have informed North Korea that it would pay a "severe price" if it launched a missile; Called on North Korea to immediately cancel missile launch plan.)

 

Looking Ahead

- (RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to leave Interest Rate unchanged at 1.75%

- (EU) EU Foreign Ministers begin 2-day meeting in Amsterdam

- (PT) Portugal Debt Agency (IGCP) announcement for PGB bond auction on Feb 10th

- 06:00 (BR) Brazil Jan IBGE Inflation IPCA M/M: 1.1%e v 1.0% prior; Y/Y: 10.5%e v 10.7% prior

- 06:00 (UK) DMO to sell combined £5.5B in 1-month, 3-month and 6-month Bills (£1.5B, 2.0B and £2.0B respectively)

- 06:00 (IS) Iceland to sell Bonds

- 06:30 (CL) Chile Dec Economic Activity Index (Monthly GDP): M/M: +0.1%e v -0.5% prior; Y/Y: 0.9%e v 1.8% prior

- 06:30 (IN) India Weekly Forex Reserves

- 06:30 (EU) ECB's Nouy (SSM chief)

- 06:45 (US) Daily Libor Fixing

- 07:00 (PT) ECBs Constancio (Portugal) in Madrid

- 07:15 (DE) German Chancellor Merkel with Portugal PM Costa in Berlin

- 07:00 (CL) Chile Dec Nominal Wage M/M: No est v 0.4% prior; Y/Y: 5.4%e v 5.5% prior

- 08:00 (PL) Poland Jan Official Reserves: No est v $94.9B prior

- 08:00 (RU) Russia Jan Official Reserve Assets: No est v $368.4B prior

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Jan Change in Nonfarm Payrolls: +190Ke v +292K prior; Change in Private Payrolls: +180Ke v +275K prior; Change in Manufacturing Payrolls: -2Ke v +8K prior

- 08:30 (US) Jan Unemployment Rate: 5.0%e v 5.0% prior; Underemployment Rate: No est v 9.9% prior; Change in Household Employment: No est v +485K prior; Labor Force Participation Rate: 62.7%e v 62.6% prior

- 08:30 (US) Jan Average Hourly Earnings M/M: 0.3%e v 0.0% prior; Y/Y: 2.2%e v 2.5% prior; Average Weekly Hours: 34.5e v 34.5 prior

- 08:30 (US) Dec Trade Balance: -$43.2Be v -$42.4B prior

- 08:30 (CA) Canada Dec Int'l Merchandise Trade: -C$2.2Be v C$2.0B prior

- 08:30 (CA) Canada Jan Net Change in Employment: +6.0Ke v +22.8K prior; Unemployment Rate: 7.1%e v 7.1% prior; Full Time Employment Change: No est v -6.4K prior; Part Time Employment Change: No est v +29.2K prior; Participation Rate: 69.5%e v 65.9% prior

- 09:00 (MX) Mexico Jan Consumer Confidence Index: 90.9e v 93.0 prior

- 10:00 (CA) Canada Jan Ivey Purchasing Managers Index (Seasonally Adj): 49.5e v 49.9 prior; PMI unadj: No est v 42.5 prior

- 11:00 (EU) Potential Sovereign Ratings after European close (Israel Sovereign Debt to be rated by S&P; Austria Sovereign Debt to be rated by Fitch; Ireland Sovereign Debt to be rated by Fitch)

- (EU) EFSF Sovereign Debt to Be Rated by Moody's

- 13:00 (US) Weekly Baker Hughes Rig Count data

- 14:00 (CO) Colombia Nov Economic Activity Index (Monthly GDP) Y/Y: 2.7%e v 3.3% prior

- 15:00 (US) Dec Consumer Credit: $16.0Be v $14.0B prior

- 15:00 (MX) Mexico weekly Banamex Survey of Economists

- 19:00 (CO) Colombia Jan CPI M/M: 0.9%e v 0.6% prior; Y/Y: 7.1%e v 6.8% prior

- 19:00 (CO) Colombia Jan CPI Core M/M: No est v 0.4% prior; Y/Y: 5.2%e v 5.1% prior

_Weekend data_

- (CN) China Jan Foreign Reserves: $3.213Te v $3.330T prior