- Resource Commodities rout in focus as markets await US Payrolls, Fed
speak and French Presidential run-off; little else like to get attention
- US Payrolls: consensus pitched marginally above Q1 average, revisions
in focus; retail payrolls again likely to be a drag
- US Unemployment Rate: modest uptick expected after stellar March
readings, still indicative of being close to full employment, watch
participation and underemployment rates
- US Average Earnings: seen maintaining higher pace
- France: turnout key, but unlikely to be enough for Le Pen to overturn
large Macron lead, as parliamentary elections move into focus
- Charts: WTI Oil, Iron Ore, Copper
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** EVENTS PREVIEW **
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It is US labour report day once again, and the rest of the statistical schedule is very much second division, outside of the overnight Indonesia Q1 GDP. The first round of Fed speak since Wednesday's FOMC meeting has deputy chair Fischer along with Bullard, Evans, Rosengren and Williams on the schedule, with particular focus on whether they stick to the statement 'hymn sheet', and how they react (if at all) to today's labour data. Yellen is also due to speak, but her topic appears unlikely to see any comments on current monetary policy. Otherwise attention then turns to Sunday's French presidential run-off, and thereafter how that might play out for the Parliamentary elections in June. Somewhat surprisingly (and with the pollster Opinionway underlining the potential large margin of error), the first poll suggests that Macron's En Marche would take between 249-286 seats, the Republicans 200-210, Socialists 28-43 , FN 15-25 and the far left 6 to 8. A close eye will also need to be kept on the resources sector, with Oil seeing a further plunge yesterday and today, while Iron Ore, Nickel and Copper leading the fall in Metals, and while Oil's fall owes much to doubts about the efficacy of the OPEC production cut, this is as much or more about the China clampdown on credit and leverage, a risk that we warned about earlier in the year, as well as the rise in China's exports of oil products, which imply that domestic demand growth is at best weak.
** U.S.A. - April Labour data **
- As it will be recalled, Payrolls were in fact the only point of weakness in an otherwise very solid March labour report, and this was a function of adverse seasonal adjustment interfacing with unseasonably poor weather, in contrast to January and February, where beneficial seasonal adjustment served to augment the impact of unseasonably warm weather. The April reading is expected to revert to slightly above average readings for H2 2016 and indeed Q1 2017 (+177K), with headline seen at +190K and Private Payrolls at +188K, and this would broadly fit with the Claims data for the survey week, as well as the 177K seen on the ADP Employment. An upward revision to March also looks to be a distinct possibility. The expected uptick in the Unemployment Rate to 4.6% from a cyclical low of 4.5% would appear to be predicated on the assumption that a reactive correction to the very punchy March 145K rise in the Workforce, 472K rise in Employment, and 326k drop in Unemployment is quite a strong probability; the more interesting aspect is whether the Underemployment Rate holds at its cyclical low of 8.9%. Average Hourly Earnings are seen up 0.3% m/m which would leave the y/y rate unchanged at 2.7%, while Average Weekly Hours are seen reverting to their recent average at 34.4, in no small part due to a rebound in Manufacturing Hours from March's weather related drop to 40.6 from 40.8. In broader terms and obviously rather contingent on the afternoon's run of Fed speak, it will be interesting to see how the Fed Funds future reacts, having jumped sharply after the FOMC 'guidance' to discount a 98% probability of a further 25 bps rate hike in June.
from Marc Ostwald