No jokes

Outlook

The jobs report at 8:30 am ET is expected to show a rise of 200,000 jobs and the same unemployment rate as last time 4.9%. The FT has 205,000 and the WSJ, 213,000. Never mind—it’s wages that count. The forecast is for a gain of 0.3% in March, overcoming the 0.1% drop in Feb. The y/y in Feb was 2.2% and we need more. The participation rate should keep going up, too. It was 62.9%in Feb, off the lowest low last fall at 62.4%--but the participation rate alone without wage gains is a wash.

We also get the ISM factory activity index, only 49.5 in Feb but still the best reading since Sept. Can it get pushed over the boom/bust line at 50? This has as much potential to move the dollar up as payrolls. Anyone trying to put together changes in various markets to come up with a risk sentiment reading has a tough job. Some readings are so counter-intuitive as to halt all thought. The Tankan disappointed, the Nikkei fell—but the yen rose. The UK has somewhat better PMIs but sterling fell against the euro and continues to look scary-soft against the dollar, with everyone wondering when the Great Brexit Sell-off will begin. Europe has slightly better data and the euro is indeed making new gains, but its equity markets are in the tank.

Alas, we must deduce that choppy oil prices and wild uncertainty over the output freeze are probably behind a weak risk sentiment. We wonder if a Saudi prince should be talking about these matters when it should be the oil minister, but never mind. We continue to think the oil freeze initiative is a major change and “should” support prices, but there are a lot of moving pieces.

As usual on payrolls day, expect a spike up in the dollar when the number comes in “good” followed by a spike lower when wages and other indicators are less than sterling. Yesterday’s 10-year yield chart still rules—markets are not willing to feel optimistic about the US economy and any excuse will do to sell.