Five Things You Need to Know to Start Your Day
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It's Jobs Day. Here are some of the things people in markets are talking about today.
At 8:30 a.m. ET the most important data point in the lead up to the Fed's June meeting is published when the Labor Department releases the Jobs Report for May. The median estimate of economists surveyed by Bloomberg points to the payrolls climbing 160,000 in May, the same as in the previous month. One factor that will depress the number is the strike by workers at Verizon Communications Inc., which could affect the jobs print by as much as 40,000. Market-implied odds of a Fed hike in June have been falling in recent days, and now stand at 22 percent, down from as high as 35 percent at the beginning of last week. Federal Reserve Bank of Chicago President Charles Evans said in London this morning that he can see a case for holding rates until inflation reaches 2 percent.
Lew warns on China
Treasury Secretary Jacob J. Lew has said that China's overcapacity is "distorting markets and important global commodities" ahead of the U.S.-China Strategic and Economic Dialogue, scheduled for June 6-7 in Beijing. With the concern over the Chinese economy already pushing the yuan towards a five-year low, Goldman Sachs Group Inc. is warning of a possible repeat of January's rout, with strategists led by Robin Brooks saying they are shifting to an "outright negative view” on the yuan.
Commodity bull market
The rally in oil is pushing the broader commodities to the brink of bull market territory. The Bloomberg Commodity Index, which tracks returns from 22 raw materials, climbed 0.7 percent to 87.28 by 6:10 a.m. ET this morning, with a close above 87.45 marking a 20 percent advance from January's low. Brent crude is trading above $50 a barrel while WTI futures gained 9 cents to trade at $49.25 a barrel at 6:03 a.m. ET. Gold was unchanged.
Stocks rise ahead of payrolls data
The MSCI Asia Pacific Index added 0.4 percent overnight, with Japan's Topix also rising 0.4 percent as investors awaited U.S. jobs data to gauge the likelihood of a Fed hike in June. In Europe, the Stoxx 600 Index was, again, 0.4 percent higher at 6:05 a.m. ET. S&P 500 futures, which clearly haven't got the '0.4 percent higher' memo yet, were flat.
Trump gets low-key endorsement
House Speaker Paul Ryan has backed Republican presidential candidate Donald Trump in an article in his hometown newspaper in Janesville, Wisconsin. While the low-key endorsement is in contrast to the publicity surround Ryan's holding out, his concession will tie him closer to the volatile nominee. Trump will make a brief trip to the U.K. and Ireland later this month, which will coincide with voting on the Brexit referendum.
What we've been reading
This is what's caught our eye over the last 24 hours.
- China's toxic debt solution has one big problem.
- No room in U.S. grain silos means dumping wheat in parking lots.
- Brazil's exploding debt-to-GDP is going to become a problem soon.
- Euro catches severe case of ECB apathy as Fed, Brexit take center stage.
- Britain's pork pies and ale could be at risk from a vote to leave EU.
- The curious case of the Russian money-losing eurobond buybacks.
- Faking salt is a big problem for snack makers.