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What to Watch for in the October Jobs Report

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It’s jobs day, Powell confirmed as Fed nominee, and winners and losers emerge in GOP tax planHere are some of the things people in markets are talking about today.

Payrolls

At 8:30 a.m. Eastern Time, the Bureau of Labor Statistics will release payrolls data, with expectations for a blow-out 313,000 new positions added as Americans roiled by the hurricane season return to work. Rebuilding efforts in areas hit by the storms may further boost the rebound from September’s disappointing number. Consensus is for unemployment to remain stable at 4.2 percent and for pay growth to have slowed. 

Powell-led Fed

President Donald Trump yesterday confirmed Jerome Powell as his nominee for Federal Reserve chair. Mike Crapo, chairman of the Senate Banking Committee, said his goal was to have Powell confirmed by year-end. For bond investors, a Powell-driven Fed is  viewed as something of a known quantity as he has voted with the consensus during his five-and-a-half-year tenure on the board of governors. Further Fed vacancies remain, with the nominees for board positions unknown. Powell’s lack of economic training may challenge his efforts to forge a consensus on the policy-making committee. 

Tax plan

The long-awaited Republican tax plan was published yesterday, with the bill estimated to add $1.49 trillion to the budget deficit. The headlines include the promised corporate tax cut to 20 percent, the reduction of most individual tax brackets, and the phasing out of the estate tax over five years. The details of some of the smaller measures moved markets. Homebuilders slid after a measure to cap mortgage-interest relief was included, while Tesla Inc. shareholders saw an already bad session yesterday get worse when the $7,500 credit for electric-vehicle purchases was cut in the proposed plan. But, overall, the equity market reacted calmly to the details, with the S&P 500 Index closing less than a point lower

Markets rise

Overnight, the MSCI Asia Pacific Index excluding Japan rose 0.1 percent, while markets in Tokyo were closed for a holiday. In Europe, the Stoxx 600 Index was a nudge higher, with French automaker Renault SA among the biggest gainers after the government announced it was cutting its stake in the car manufacturer. S&P 500 futures were broadly unchanged, the 10-year Treasury yield was at 2.352 percent, and gold was slightly lower as investors await the jobs report. 

Restructuring 

President Nicolas Maduro said Venezuela will seek to restructure its global debt following one more payment by the state oil company today. PDVSA bonds maturing in 2027 were quoted at 20 cents on the dollar in London this morning. All told, there’s $143 billion in foreign debt owed by the government and state entities, according to Torino Capital. Mark Mobius, the executive chairman at Franklin Templeton’s emerging markets group, said he’s glad to be on the sidelines for this one as he’s been out of the trade since Hugo Chavez came to power in 1999. 

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