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Mixed finish to March plus Manufacturing PMI and US nonfarm payrolls previews

Mixed finish to March plus Manufacturing PMI and US nonfarm payrolls previews

In Europe, indices traded lower on the day, but better than expected UK GDP, Germany retail sales and France consumer spending propelled big gains for continental currencies, particularly EUR, CHF and NOK. CAD started the day off strong propelled by stronger than expected Canadian GDP but reversed and fell back as USD rebounded during the day along with SGD, AUD and NZD. Press reports Atlanta Fed President Lockhart still thinks three rate hikes this year are possible but likely not four may have been used and an excuse for a trading bounce. Tomorrow we could see more hawkish talk from Cleveland Fed President Mester, but unless there’s a big change in the data, Fed Chair Yellen’s comments may continue to override everyone else outside of intraday trading fluctuations.

Nonfarm payrolls are due Friday morning but in the wake of comments from Fed Chair Yellen and other FOMC members this week, it would likely take a lot to change speculation away from the current party line of 2 rate hikes this year with the next one most likely in June. It would likely take growth above 300K to set a more hawkish tone and a negative reading to make the tone any more dovish than it already is.

The street is expecting a 205K increase in payrolls down from 242K last month. ADP payrolls were 200K even beating the street by 5K, but jobless claims have been rising over the last month although still well below 300K. Based on all of this, I think we’ll see a 10K downward revision to last month and 220K payroll growth.  This would keep the US in the Goldilocks groove of job growth strong enough to maintain confidence in the US economy and keep recession talk at bay but not too strong which would put pressure on the Fed to raise interest rates sooner.

The other main focus today is on manufacturing PMI reports from around the world, the first broad based look at how economies have been performing in March. In particular, traders may focus on China’s numbers looking for signs of which way it’s economy is heading after the market turmoil of the last quarter and at Europe for confirmation or rejection of recently improving economic indicators. Japan may also be a focus today with traders looking for indications from the manufacturing PMI and Tankan manufacturing surveys as to whether negative interest rates have had any impact on the economy or expectations.

Corporate News

Starwood Hotels    Ambang has dropped out of the takeover battle, leaving Marriott as the top suitor.  

Economic News

Significant announcements released overnight include:

US Chicago PMI            53.6 vs street 50.8 and previous 47.6
US natural gas                (25 BCF) vs street (20 BCF)
US jobless claims            276K vs street 265K

Canada Jan GDP over month                  0.6% vs street 0.3%
Canada Jan GDP over years                   1.5% vs street 1.1%,
Canada Dec GDP over year         revised up to 0.6% from 0.5%

UK Q4 GDP update            2.1% vs street 1.9%
UK Lloyds Business Barometer        43 vs previous 28
UK GfK consumer confidence        0 vs street (1)

Germany unemployment change    0K vs street (6K)
Germany unemployment rate        6.2% as expected

Germany retail sales            5.4% vs street 2.2%
Spain retail sales            3.9% vs street 4.0%
Norway retail sales            (0.5%) vs street (0.2%)
Greece retail sales            (3.8%) vs previous (0.2%)

Eurozone consumer prices        (0.1%) as expected
Eurozone core CPI            1.0% vs street 0.9%
France consumer prices             (0.2%) vs street (0.1%)
Spain consumer prices            (0.8%) as expected
Italy consumer prices            (0.3%) vs street (0.2%)

France consumer spending        1.8% vs street 0.9%

Japan housing starts            7.8% vs street (2.4%)
Japan construction orders        (12.4%) vs previous (13.8%)

Australia new home sales        (5.3%) vs previous 3.1%
NZ ANZ activity outlook            29.4 vs previous 25.5
NZ ANZ business confidence        3.2 vs previous 7.1


Upcoming significant economic announcements include:

(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)  

10:50 am AEDT        Japan Tankan Large Mfg Index    street 8 vs previous 12
10:50 am AEDT        Japan Tankan Large Mfg outlk    street 7
4:30 pm AEDT        Australia commodity index    previous (21.6%)

7:00 am BST        UK Nationwide house prices    street 5.1%
9:00 am BST        Italy unemployment rate        street 11.5%
10:00 am BST        Eurozone unemployment rate    street 10.3%

8:30 am EDT        US Mar nonfarm payrolls    street 206K
8:30 am EDT        US Feb nonfarm payrolls    revised    from 242K
8:30 am EDT        US payrolls net 2M revision    previous 30K
8:30 am EDT        US private payrolls         street 190K vs previous 230K
8:30 am EDT        US unemployment rate         street 4.9%
8:30 am EDT        US average hourly earnings    street 2.2%
8:30 am EDT        US participation rate        previous 62.9%

10:00 am EDT        US construction spending    street 0.1% vs previous 1.5%
10:00 am EDT        US consumer sentiment        street 90.5

12:00 pm EDT        FOMC Mester speaking
1:00 pm EDT        US Baker Hughes drill rig count    previous 464


Manufacturing PMI reports:

9:30 am AEDT        Australia            previous 53.5
12:00 pm AEDT        China official            street 49.4 vs previous 49.0
12:00 pm AEDT        China non-manufacturing    previous 52.7
12:45 pm AEDT        China Caixin            street 48.3 vs previous 48.0
1:00 pm AEDT        Japan Nikkei            previous 49.1

9:30 am BST        UK                street 51.2
8:55 am BST        Germany            street 50.4
8:50 am BST        France                street 49.6
8:15 am BST        Spain                street 54.0
8:45 am BST        Italy                stret 52.5
7:30 am BST        Sweden            street 52.8
8:00 am BST        Norway                street 48.0
8:00 am BST        Poland                street 52.6
9:00 am BST        Greece                previous 48.4

9:30 am EDT        Canada                previous 49.4
9:45 am EDT        US Markit            street 51.5
10:00 am EDT        US ISM                street 50.8 vs previous 49.5
10:00 am EDT        US ISM new orders        previous 51.5


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