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February 2, 2018, by Lorcan Roche Kelly

(Bloomberg)

Payrolls

At 8:30 a.m. Eastern Time today, employment and wage data for the U.S. for January will be released, with expectations for 180,000 job additions, and a 0.2 percent increase in average hourly earnings. Mohamed A. El-Erian, writing for Bloomberg View, says that he is looking for a solid pickup in jobs and pay to underpin the consumption growth that’s juicing output.

Bond jitters

U.S. Treasuries continue to struggle to find support ahead of the payrolls numbers, with the 30-year bond yield rising above 3.0 percent and the 10-year note flirting with 2.8 percent, close to a three-year high. The Treasury selloff in concert with rising market-based measures of price expectations have policy makers mulling the inflation outlook. ECB Executive Board member Benoit Coeure warned this week that markets might be too complacent in pricing risk premiums, while a debate is warming up about the Federal Reserve’s inflation target. The bond selloff is not just a U.S. phenomenon, with U.K. yields reaching their highest level since the Brexit vote.

Cryan wolf

It probably feels like a case of deja-vu all for Deutsche Bank shareholders as results from the German lender this morning showed a third annual loss. Chief Executive Officer John Cryan tried to reassure investors, promising — again — that this year would see a return to growth. Revenue at the bank has fallen eight out of the ten quarters since Cryan took the helm at the institution. Shares in Deutsche Bank dropped as much as 6.4 percent in Frankfurt trading.

Markets drop

Overnight, the MSCI Asia Pacific Index lost 0.7 percent, leaving the benchmark gauge poised for its worst weekly loss since September 2016, while Japan’s Topix index closed 0.3 percent lower with technology shares the biggest drag. In Europe, the Stoxx 600 Index was 0.9 percent lower at 5:40 a.m. Eastern Time, with every sector in the index falling. S&P 500 futures dropped 0.7 percent, and gold was slightly higher.

Oil outlook

After yesterday’s tech storm, today is the turn of oil majors to dominate earnings in the U.S., with both Exxon Mobil Corp. and Chevron Corp. reporting before the bell. In the crude market, a barrel of West Texas Intermediate for March delivery was trading at $65.06, buoyed by bullish forecasts from Wall Street’s biggest banks for the commodity. Investors will also be keeping an eye on the Baker Hughes U.S. rig count due at 1:00 p.m. today after last week’s biggest expansion in 10 months.



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