4. August 2021

UniCredit: We expect another solid NFP report – Markets Today

PRESSEMITTEILUNG | We expect another solid NFP report – Markets Today – 8 January 2016.

News and Events
– CH: Press reports suggest that the “National team” was back in the market today to support stocks following yesterday’s heavy selloff.

– GE: German IP unexpectedly declined in November, down 0.3% mom. However, the previous data was revised up to 0.5% from 0.2%. The November drop was driven by a large contraction in capital goods output, while other sectors recorded solid growth. Also out today, exports rose 0.4% mom in November, with imports up 1.6%.

– FR: IP probably contracted 0.6% mom in November, after having expanded a cumulative 2.3% in the previous three months. The expected drop should therefore be considered a technical correction.

– US: We see NFPs increasing by a further 190k in December, with the unemployment rate down by 0.1pp to 4.9% – a new low for this cycle (14:30 CET).

FI/FX Strategy
– FI view: After the suspension of the circuit-breaker rules for the Chinese equity market, the Shanghai Composite stabilized and has currently recovered by around 2%. Selling pressure on the CNY has also ended and it appears that the volatility spike will also likely come to an end. Early indications also point to a recovery of Western equity markets. This may add to the turnaround in major bond markets that started yesterday afternoon. Today, all eyes are on the US employment report and our expectation of a constructive reading is likely to fuel additional losses in US and euro-area bond markets ahead of the weekend.

– USD: The US employment report remains an important event for markets and will attract investor attention again today but it is less likely to move the FX market now that the Fed has already started its rate-normalization process: a much stronger job creation report than expected will be needed to offer the USD a strong boost (on speculation that the Fed will speed up its tightening process). Even so, we think such a boost would be unsustainable given USD overvaluation. On the other hand, labor data in line with consensus (or even a negative surprise) are unlikely to drag the USD sharply lower in the short term given poor risk sentiment, which is lending support to safe havens. In the medium term, we remain USD bearish.

– CAD: Labor data for December are also scheduled for release today in Canada. Employment changes here are likely to rebound after the big contraction (-35.7k) in November, which, however, was entirely due to the slump in part-time workers (-72.3k) that overshadowed the 36.6k increase in full-time employees. New net job creation beyond 10k, which markets expect, together with a steady unemployment rate at 7.1%, are likely to offer the CAD some relief (at least against other commodity-related currencies) after it lost nearly 16% in TWI basis last year.

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