Dentalfloss
Legendary member
- Messages
- 63,404
- Likes
- 3,726
- All eyes on US Labour data, UK Construction PMI and US / Canada Trade
Balance also due, as well flagged US withdrawal from Paris Climate
accord and Powell speech on Fed balance sheet reduction are digested
- US Payrolls: ADP skews Street whisper well above consensus; Leisure and
Govt potentially a drag
- US Unemployment Rate: seen unchanged below Fed sustainable rate, close
eye needs to be kept on Underemployment Rate
- US Average Hourly Earnings: marginal uptick in y/y terms seen, anecdotal
evidence suggests stronger upward momentum developing
- Paris Climate Accord: US withdrawal only harms itself, alternative
energy sector train has long left the station
..........................................................................
********************
** EVENTS PREVIEW **
********************
As global stock markets greet the new month with a series of new all-time highs, it is time again for US Payrolls bingo, with the only other item likely to prompt any reaction being the UK Construction PMI, even if latest election polling data will inevitably prove rather more senstitive for GBP FX rates. The other key talking point was the heavily flagged decision by President Trump to pull the US out of the Paris Climate Accord, unsurprisingly prompting any array of criticism from other governments and a very broad church of business leaders from Goldman Sachs's Blankfein through Disney's Iger to the rather less surprising Elon Musk of Tesla fame. It again underlines Trump's ignorance, and will neither benefit the US resources sector, nor stop the inexorable march of cleaner, alternative energy, which has long had its own momentum. Foolishly it will also serve to drive the EU/Germany, China and even India ever closer together, and as such is little more than a rather infantile act of self-harm, with the key question being what US companies in the sector decide to do in terms of allocating CapEx for research and development in geographical terms. Last but not least, we would like to give a special mention to Riksbank's Stefan Ingves, he of 'inflation nutter' fame and currency manipulator extraordinaire, for his bare faced cheek in remarks to the WSJ yesterday, in which he said that the Swedish government should undertake measures to rein in the Swedish housing bubble, which ultra easy Riksbank monetary policy settings has unleashed - this really is the definition of chutzpah.
** U.S.A. - May Labour data **
- Following on from the much stronger than expected ADP Private Employment measure, there is little doubt that the 'whisper' number for today's Payrolls is well in excess of the consensus for a dip to 180K from May's better than expected 211K. Weekly jobless claims were close to 43 year lows for most of the month, above all in survey week, though two sectors may well act as a drag on the headline: firstly the 55K surge in Leisure/Hospitality in April will either see a revision or a reactive correction, and government hiring will likely have been restrained by the debt ceiling/omnibus budget bill forago. But the point remains that with the Unemployment Rate at 4.4%, and a breakeven rate of Payrolls growth somewhere in the 80-100K area, the US labour market remain extremely tight, with a close eye also needing to be kept on the U-6 Underemployment Rate (see chart), which is rapidly approaching its December 2006 cyclical low. As for the key Average Weekly Earnings, the usual 0.2% m/m is expected which would see the y/y rate tick up marginally to 2.6% from 2.5%, which, while healthy, does not put any pressure on the Fed to remove accommodation at a faster pace. However the Beige Book observations on the labour market should be noted: "Labor markets continued to tighten, with most Districts citing shortages across a broadening range of occupations and regions. Despite supply constraints impeding the ability of firms to attract and retain qualified workers, most Districts reported that employment continued to grow at a modest to moderate pace. Similarly, most firms across the Districts noted little change to the recent trend of modest to moderate wage growth, although many firms reported offering higher wages to attract workers where shortages were most severe. A manufacturing firm in the Chicago District reported attracting better applicants and improving retention for its unskilled workforce by raising wages 10 percent."! In respect of the Fed, Powell's speech yesterday https://www.federalreserve.gov/newsevents/speech/powell20170601a.htm and his CNBC interview http://www.cnbc.com/2017/06/01/cnbc...ve-liesman-on-squawk-on-the-street-today.html are well worth recapping on, given that his views are generally close to the FOMC consensus. The overall Trade Balance data is also due, and is expected to mirror the advance Goods Trade Balance in seeing a wider deficit of $-46.1 Bln, after a better than forecast
from Marc Ostwald
Balance also due, as well flagged US withdrawal from Paris Climate
accord and Powell speech on Fed balance sheet reduction are digested
- US Payrolls: ADP skews Street whisper well above consensus; Leisure and
Govt potentially a drag
- US Unemployment Rate: seen unchanged below Fed sustainable rate, close
eye needs to be kept on Underemployment Rate
- US Average Hourly Earnings: marginal uptick in y/y terms seen, anecdotal
evidence suggests stronger upward momentum developing
- Paris Climate Accord: US withdrawal only harms itself, alternative
energy sector train has long left the station
..........................................................................
********************
** EVENTS PREVIEW **
********************
As global stock markets greet the new month with a series of new all-time highs, it is time again for US Payrolls bingo, with the only other item likely to prompt any reaction being the UK Construction PMI, even if latest election polling data will inevitably prove rather more senstitive for GBP FX rates. The other key talking point was the heavily flagged decision by President Trump to pull the US out of the Paris Climate Accord, unsurprisingly prompting any array of criticism from other governments and a very broad church of business leaders from Goldman Sachs's Blankfein through Disney's Iger to the rather less surprising Elon Musk of Tesla fame. It again underlines Trump's ignorance, and will neither benefit the US resources sector, nor stop the inexorable march of cleaner, alternative energy, which has long had its own momentum. Foolishly it will also serve to drive the EU/Germany, China and even India ever closer together, and as such is little more than a rather infantile act of self-harm, with the key question being what US companies in the sector decide to do in terms of allocating CapEx for research and development in geographical terms. Last but not least, we would like to give a special mention to Riksbank's Stefan Ingves, he of 'inflation nutter' fame and currency manipulator extraordinaire, for his bare faced cheek in remarks to the WSJ yesterday, in which he said that the Swedish government should undertake measures to rein in the Swedish housing bubble, which ultra easy Riksbank monetary policy settings has unleashed - this really is the definition of chutzpah.
** U.S.A. - May Labour data **
- Following on from the much stronger than expected ADP Private Employment measure, there is little doubt that the 'whisper' number for today's Payrolls is well in excess of the consensus for a dip to 180K from May's better than expected 211K. Weekly jobless claims were close to 43 year lows for most of the month, above all in survey week, though two sectors may well act as a drag on the headline: firstly the 55K surge in Leisure/Hospitality in April will either see a revision or a reactive correction, and government hiring will likely have been restrained by the debt ceiling/omnibus budget bill forago. But the point remains that with the Unemployment Rate at 4.4%, and a breakeven rate of Payrolls growth somewhere in the 80-100K area, the US labour market remain extremely tight, with a close eye also needing to be kept on the U-6 Underemployment Rate (see chart), which is rapidly approaching its December 2006 cyclical low. As for the key Average Weekly Earnings, the usual 0.2% m/m is expected which would see the y/y rate tick up marginally to 2.6% from 2.5%, which, while healthy, does not put any pressure on the Fed to remove accommodation at a faster pace. However the Beige Book observations on the labour market should be noted: "Labor markets continued to tighten, with most Districts citing shortages across a broadening range of occupations and regions. Despite supply constraints impeding the ability of firms to attract and retain qualified workers, most Districts reported that employment continued to grow at a modest to moderate pace. Similarly, most firms across the Districts noted little change to the recent trend of modest to moderate wage growth, although many firms reported offering higher wages to attract workers where shortages were most severe. A manufacturing firm in the Chicago District reported attracting better applicants and improving retention for its unskilled workforce by raising wages 10 percent."! In respect of the Fed, Powell's speech yesterday https://www.federalreserve.gov/newsevents/speech/powell20170601a.htm and his CNBC interview http://www.cnbc.com/2017/06/01/cnbc...ve-liesman-on-squawk-on-the-street-today.html are well worth recapping on, given that his views are generally close to the FOMC consensus. The overall Trade Balance data is also due, and is expected to mirror the advance Goods Trade Balance in seeing a wider deficit of $-46.1 Bln, after a better than forecast
from Marc Ostwald
