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Jobs Report Preview (Why It’s the Most Important Jobs Report of the Year)

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What’s in Today’s Report:

  • Jobs Report Preview (Why It’s the Most Important Jobs Report of the Year)
  • EIA Analysis and Oil Market Update

Futures are moderately higher following a very quiet night of news as investors position for tomorrow’s jobs report.

Euro Zone PPI was much hotter than expected, rising 2.3% vs. (E) 1.2%, and that is the second consecutive strong inflation number from the EU.

There were no new infrastructure or COVID headlines overnight, and investors continue to add exposure ahead of an anticipated “Goldilocks” jobs report.

Today’s focus will be on economic data, especially Jobless Claims (E: 350K) and Unit Labor Costs (which is contained in Productivity & Costs).  Unit Labor Costs are expected to rise 1.0% but if the number comes in decidedly higher than that, it will add to inflation fears (and could be a mild headwind on stocks today).

Tom Essaye Quoted in CNBC on August 30, 2021

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Treasury yields fall slightly as investors await key jobs report

The 10-year yield continues to build upside momentum, and Powell’s dovish tone on Friday won’t…Tom Essaye of the Sevens Report said in a note on Monday. Click here to read the full article.

Why Powell’s Speech Caused a Rally

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What’s in Today’s Report:

  • Why Powell’s Speech Caused a Rally
  • Weekly Market Preview:  Will Data Keep the Goldilocks Rally Going?
  • Weekly Economic Cheat Sheet:  Jobs Week (This is the Most Important Jobs Report in Months)

Futures are slightly higher mostly on momentum from Friday’s “dovish Powell” rally, following a quiet weekend.

Fed Chair Powell’s speech on Friday was taken as slightly dovish and that drove the rally in U.S. stocks and it’s carried over globally as we start a new week (all the major foreign markets we monitor are modestly positive).

Economic data was sparse as Euro Zone Economic Sentiment slightly missed expectations (117.5 vs. (E) 118) although that’s not moving markets.

Today there is one economic report, Pending Home Sales (E: 0.3%), but that shouldn’t’ move markets.  Instead, as long as the dual tailwinds of 1) Receding COVID cases in the U.S. and 2) A dovish Fed remain, stocks should be buoyant (although if either idea is contradicted expect some give back of last week’s rally).  Finally, keep in mind this is one of the most popular vacation weeks of the year due to the looming Labor Day weekend, so don’t be surprised by low volumes and some added volatility.

Jobs Report Preview (Too Hot is the Risk)

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What’s in Today’s Report:

  • Jobs Report Preview (Too Hot is the Risk)
  • Oil Update and Inventory Analysis

Futures are slightly higher following a quiet night as markets tentatively bounce back from Wednesday’s losses.

Economic data was mixed overnight as German Manufacturers’ Orders beat estimates (4.1% vs. (E) 1.5%) while the UK Construction PMI missed estimates (58.7 vs. (E) 63.8).

On COVID, Los Angeles could  follow NYC in requiring proof of vaccination for indoor activities (if this becomes widespread policy in large cities it’ll be an economic headwind.)

Today we have a Bank of England meeting (No Change to Rates Expected), Jobless Claims (E: 381K), and one Fed speaker, Waller at 10:00 a.m. ET (who could be hawkish again, remember he called for tapering to start as early as September).

But, unless there’s a major surprise from the BOE or jobless claims, then COVID headlines will drive markets, and any signs of restrictions or behavior changes in people will cause volatility (and a decline in stocks).

Tom Essaye Interviewed by Yahoo Finance on July 1, 2021

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Why a ‘too hot’ jobs number could spell trouble for markets.

As I said in my morning report, for the first time in years, I’m actually worried about a too…said Tom Essaye, founder of Sevens Report Research. Click here to read the full interview.

Jobs Day

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What’s in Today’s Report:

  • Why Inflation Might Not Be As Temporary as the Fed Thinks
  • OPEC Update and Oil Outlook

Futures are slightly higher ahead of the jobs report following a quiet night of news.

The only notable economic report overnight was Eurozone PPI, which rose 9.6% yoy vs. (E) 9.5% yoy.  That report isn’t moving markets, but it’s the second inflation report in two days to imply inflation pressures haven’t peaked.

There were no new developments on infrastructure.

Today the jobs number is key and expectations are as follows: Job Adds 675K, UE Rate 5.7%, Wages yoy 3.1%.  As long as the headline job adds number isn’t close to 1 million and the wages number doesn’t spike well above expectations, markets should be able to generally digest this report, even if it is a mild surprise.

Other economic indicators today include International Trade in Goods (E: -$71.2B) and Factory Orders (E: 1.3%) but we don’t expect them to move markets.

Jobs Report Preview (Could It Make the Fed More Hawkish?)

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What’s in Today’s Report:

  • Jobs Report Preview – Could A “Too Hot” Report Make the Fed more Hawkish?
  • Oil Update and EIA Analysis

Futures are slightly higher following a night of mixed economic data.

Global June manufacturing PMIs were mixed as the Japanese (52.4 vs. 53.0) and UK (63.9 vs. (E) 64.2) PMIs missed estimates, while the EU manufacturing PMI beat expectations (63.4 vs. (E) 63.1.).

The net impact of the data is to show the global recovery is on going, but also that it has lost a bit of momentum.

Today’s focus will be on economic data, with the two important reports being Jobless Claims (E: 387K) and the June ISM Manufacturing Index (E: 61.1).  As has been the case, markets will want “Goldilocks” data to start the quarter, in that the numbers show solid activity, but nothing that would make the Fed taper more aggressively.  There’s also one Fed speaker, Bostic at 2:00 p.m. ET, but he shouldn’t move markets.

 

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Important Economic Data This Week

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What’s in Today’s Report:

  • Weekly Market Preview:  Is the Recovery Losing Momentum?
  • Weekly Economic Cheat Sheet:  Jobs Report Friday, Global PMIs Thursday (Two Important Reports)

Futures are slightly lower following a weekend of mixed macro-economic news.

On infrastructure, President Biden reaffirmed his support for the bipartisan bill, reversing Friday’s stance that he’d only sign it as part of a larger infrastructure program.  But, at this point, the entire process remains fluid, and markets don’t expect any final bills anytime soon (although we should prep for more “corporate tax hike” headlines, although that remains ultimately unlikely).

COVID trends deteriorated slightly over the weekend with Australia and South Africa re-implementing lockdowns following an increase in cases of the “delta” variant but so far this isn’t an issue in the U.S. (so it’s not directly impacting markets).

Today there are no notable economic reports but there are three Fed speakers including Williams (9:00 a.m.ET), Harker (11:00 a.m. ET) and Quarles (1:10 p.m. ET), and if their comments are more hawkish than expected it will be a slight headwind on stocks.  On infrastructure, expect more headlines but again the market doesn’t expect anything passing anytime soon, so they won’t be material influences on the markets.

Market Multiple Chart

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What’s in Today’s Report:

  • Market Multiple Chart
  • EIA Analysis and Oil Update
  • What Yesterday’s Jobs Numbers Mean for Today’s Report (and the Market Reaction)

Futures are little changed ahead of this morning’s jobs report and following a mostly quiet night of news.

Economic data was mixed overnight as the UK Construction PMI beat estimates while Euro Zone Retail Sales missed, but neither number is moving markets.

Infrastructure “chatter” about a potential $1 trillion compromise is getting louder, but markets remain skeptical about an infrastructure deal anytime soon.

Focus today will be on the Jobs Report and expectations are as follows: Job Adds 645K, UE Rate 5.9%, Wages 0.2% m/m).  Thursday’s strong employment data (ADP and claims) makes the market more sensitive to a “Too Hot” report (and potentially less dovish Fed) than it was on Wednesday, but the bottom line is that a number near either extreme (900k or 300k) will likely cause at least a temporary market headwind.

Also, Fed Chair Powell is speaking at a Bank of International Settlements Climate panel right now, but that shouldn’t move markets.

What Can Go Right and What Can Go Wrong?

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What’s in Today’s Report:

  • What Can Go Right and What Can Go Wrong?
  • Weekly Economic Preview:  More Tapering Talk?
  • Weekly Economic Cheat Sheet:  All About Friday’s Jobs Report.

Futures are modestly higher thanks to more solid economic data combined with generally in-line inflation metrics.

The Chinese, EU, and UK final May manufacturing PMIs all largely met expectations and confirmed the global economic recovery is continuing (and importantly not deteriorating).

EU HICP (their CPI) rose 2.0% vs. (E) 1.9%, but the core reading was in line with expectations at 0.9% and as such not spiking inflation fears.

Focus today will be on the ISM Manufacturing PMI (E: 60.9) and the market will want to see a “Goldilocks” number that shows the economic rebound is continuing, but that activity isn’t so hot that it increases inflation fears.  If we get that “Goldilocks” number stocks can extend the early rally.