A look at the day ahead in European and global markets from Kevin Buckland
Markets are in buoyant mood, clearly anticipating Friday’s hotly awaited U.S. payrolls report will keep the Fed on course to cut rates this month and once more by year-end.
It was the previous month’s payrolls shocker that got speculation really going that U.S. monetary policy would need to come down fast, and economists predict an only slightly higher reading this time around.
Fed Chair Jay Powell surprised many at last month’s closely watched Jackson Hole symposium with a keynote that suggested a cut on September 17 is coming unless the data gets in the way.
Fedspeak from other officials has been leaning dovish on the whole, and the window for additional comments closes later today as the central bank enters a blackout period in the run-up to its policy gathering.
U.S. stock futures are pointing higher after the S&P 500 notched a record-high close overnight, and the Nasdaq Composite came within 6 points of doing the same.
European futures are doing the same, and Asian markets from Japan to Taiwan to mainland China are rising about 1%.
Bond markets too, which had turned so volatile at the start of the week, have been calmed by a run of soft U.S. jobs data that has bolstered confidence for a non-farm payrolls report that will further the narrative for easier Fed policy.
After surging to record highs on Wednesday, Japanese 30-year government bond yields have retraced about half of that day’s rise. Similarly dated U.S. Treasury yields have slipped to three-week lows, while two- and 10-year yields have eased to four-month troughs.
British 30-year gilt yields are back at the levels from a week ago, before the four-day spike to the highest since 1998. German and French yields are down from multi-year peaks.
Gold is also biding its time, hovering below Wednesday’s all-time high following a breathless seven-day rally.
That means there’s a lot riding on a benign U.S. payrolls reading. And there’s not a lot to distract from it in the lead-up, with German factory data, British retail sales and revised euro-area GDP the most noteworthy.
Key developments that could influence markets on Friday:
-U.S. payrolls
-Canada payrolls
-Euro zone revised GDP
-Germany industrial orders, manufacturing output
-UK retail sales, Halifax house prices
(Reporting by Kevin Buckland; Editing by Sam Holmes)
Comments