The main event today will be Non Farm Payrolls, to be released this afternoon at 1:30pm. Estimates suggest the economy will add 180k people to the workforce, up from April’s 175k. The Unemployment Rate is expected to be 3.9%, and Average Hourly Earnings are projected to remain unchanged at 3.9%. US markets were fairly muted yesterday as traders awaited the data, the recent equity rally slowed yesterday, the S&P 500 was almost flat for the day, inching down marginally, while the Nasdaq Composite retreated 0.1%. Notably, Nvidia was the biggest drag on both indices, slipping back under the $3tn market cap mark after falling 1.2%. US Treasury yields were up, the 10-year adding at 4.28%, while two-year yield rose to 4.72%.
Overnight, we had Japan’s consumer spending data, rising 0.5% in April from a year earlier as outlays on education, clothing and shoes increased, though falling 1.2% on a month-on-month basis. Official customs data from China this morning showed exports grew at their fastest rate in four months in May, growing 7.6% last month year-on-year. Xi Jinping’s government has focused on manufacturing against a backdrop of weak consumer demand and a property slowdown. Though China’s role in international trade has come under scrutiny and we are expecting an EU probe into subsidies for Chinese electric vehicles is expected to be published this month.
European markets were fairly unmoved by the ECB rate cut, the Euro held steady while the two-year German Bund yield rose to 3.02% shortly after the announcement. Swaps markets slightly lowered their bets on a second cut by September to 65%, from 70% ahead of the announcement. Stocks in the region closed higher, the region-wide Stoxx 600 gained 0.7%, France’s Cac 40 added 0.4%, Germany’s Dax gained 0.4% and London’s FTSE 100 rose 0.5%. We will have the Eurozone GBP data today for Q1 24 at 10am, the QoQ number expected at 0.3%, later we have the Lagarde speech at 3:15pm.
The Mexican Peso weakened more than 2% yesterday. Following President Andrés Manuel López Obrador’s Morena party landslide victory in Sunday’s elections, Morena’s lower house leader, Ignacio Mier, announced that López Obrador’s proposed changes, including firing the country’s top judges and eliminating independent regulators, would be voted on in committees once the new congress takes office. Understandably this has made many investors concerned.
