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Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • What the OPEC+ Charter Means for Oil

Futures are rising with EU shares this morning as investors welcome news that Christine Lagarde (largely viewed as a dove) will likely succeed Mario Draghi as ECB President.

In the bond market, global yields hit new lows overnight (the 10-Yr touched 1.94%) on the dovish Lagarde news, but also as China’s June Composite PMI fell to 50.6 from 51.5 in May. The EU data was slightly better than expected, however, which has helped yields stabilize this morning.

Gold is also notably higher by 1.43% today and futures tested recently established multi-year highs overnight thanks to the dovish money flows.

Markets close at 1:00 p.m. today however there are multiple economic reports due out in the U.S. that warrant watching as they have the potential to move markets: ADP Employment Report (E: 140K), International Trade (E: -$53.4B), Jobless Claims (E: 220K), Factory Orders (E: -0.5%), and the ISM Non-Manufacturing Index (E: 55.8).

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • Weekly EIA Analysis and Oil Update

S&P futures are extending this week’s “squeezy” rally in early trade as dovish optimism continues to dominate the tape ahead of this morning’s ECB announcement while economic data was better than feared overnight.

German Manufacturers’ Orders rose 0.3% vs. (E) -0.1% in April while Eurozone GDP was in –line at 0.4% in Q1. Importantly, neither report was inflationary which is allowing the global rally, driven by a notable dovish shift in sentiment, alive today.

Looking into today’s session, Europe will be in focus early as the ECB Announcement is due out at 7:45 a.m. ET and Draghi’s press conference is scheduled for 8:30 a.m. ET. As long as there are no hawkish surprises out of the ECB, money flows are likely to remain “risk-on” as the U.S. session gets underway.

Domestic focus today will be on the few data points: International Trade (E: -$50.8B), Jobless Claims (E: 215K), and Productivity and Costs (E: 3.4%, -0.8%) as well as Fed speakers: Kaplan (8:40 a.m. ET) and Williams (1:00 p.m. ET).

Again, as long as there are no hawkish surprises today, the path of least resistance is still higher for stocks, although the market has gone from deeply oversold, to near term overbought in a hurry so some consolidation or a modest pullback should not come as a surprise ahead of tomorrow’s jobs report.

FOMC Takeaways (Where’s the Positive Catalyst Now?)

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What’s in Today’s Report:

  • FOMC Takeaways – No Discernable Positive Catalysts for Stocks
  • Why This Fed Isn’t Good at Communication
  • Jobs Report Preview
  • Oil Market Update

Futures are tentatively bouncing from yesterday’s late sell off as markets digest an imminent U.S./China trade deal, mixed economic data and the Fed meeting.

Multiple press reports yesterday implied a U.S./China trade deal could be completed next Friday, with the 10% tariffs on 250B in goods immediately reduced.  This meets current market expectations and is already priced in, so there was no rally on the news.

Economic data met low expectations overnight as the EU Manufacturing PMI rose slightly to 47.9 vs. (E) 47.8, but that’s not moving markets.

Today we get a few notable economic reports via Jobless Claims (E: 215K), Productivity and Costs (E: 1.9%, 1.8%) and Factory Orders (E: 1.5%), but none of those should move markets.  Instead, with no major events scheduled for today, traders will be focused on whether the S&P 500 can hold yesterday’s low (2923).  If that support is fails than look for selling to accelerate.