ADP Tees Up a Solid February Jobs Report on Friday

Economic Data

- (IE) Ireland Feb Live Registry Monthly Change: -4.3K v -3.8K prior; Unemployment Rate: 10.1% v 10.3% prior
- (PL) Poland Central Bank (NBP) cuts Base Rate by 25bps to 1.75%
- (US) MBA Mortgage Applications w/e Feb 27th: +0.1% v -3.5% prior
- (BR) Brazil Jan Industrial Production M/M: 2.0% v 2.0%e; Y/Y: -5.2% v -5.0%e
- (BR) Brazil Feb Services PMI: 52.3 v 48.4 prior; Composite PMI: 51.3 v 49.2 prior
- (US) Feb ADP Employment Change: +212K v +219Ke
- (US) Feb Final Markit Services PMI: 57.1 v 57.0e; Composite PMI: 57.2 v 56.8e
- (CA) Bank of Canada (BOC) leaves Interest Rates unchanged at 0.75%, as expected
- (US) Feb ISM Non-Manufacturing Composite: 56.9 v 56.5e
- (US) DOE Crude: +10.30M v +4.5Me; Gasoline: +0.05M v -2Me; Distillate: -1.72M v -2.5Me

US equities are rebounding from steep early losses this morning, led higher by a big rebound in the Nasdaq. As of writing, the DJIA is down 0.61%, the S&P500 is off 0.63% and the Nasdaq is down 0.28%

The February ADP report was pretty strong, with another reading over 200K, just shy of expectations, and a big revision of the January reading to 250K from 213K prior. The annual benchmark revisions significantly boosted the numbers from all of 2014. The consensus estimate for Friday's February non-farm payrolls is around 240K, and the average gap between the ADP and BLS readings has been around 37K, suggesting the jobs report will remain in line with recent readings.

The euro has only weakened further this morning, with EUR/USD dropping to fresh YTD lows. EUR/USD fell from 1.1130 ahead of the open of US cash trading to 1.1070 as of writing, breaking through January lows around 1.1100. The ECB is widely expected to provide a formal start date for QE plus more details of the program after tomorrow's council meeting. Additionally, there were Swiss press reports (quickly denied) that Swiss Finance Minister Widmer-Schlump wants the SNP to set a new minimum EUR/CHF rate.

Sovereign rates are volitile today. The UST 10-year yield approached the February high of ~2.15% earlier today, rising as high as ~2.14% before dropping to 2.094%. Yields have snapped back from the lows post-ISM services data.

Dovish Fed voter Evans reiterated his position in remarks this morning. Evans said the Fed should only hike rates once there is confidence inflation is already moving higher, and would prefer to delay rate hikes to the first half of 2016. Evans warned raising rates too early could undermine the economy, while the cost of tightening too late are low.

Share of teen apparel retailers American Eagle and Abercrombie & Fitch are headed in opposite directions this morning after fourth-quarter reports. AEO is up more than 9% after modestly topping expectations and topping its own expectations for declining comps with a flat SSS reading. ANF is off 14% after missing on revenue, declining to offer much in the way of guidance and generally offering pessimistic commentary. 

Looking Ahead

- 13:00 (US) Fed's George speaks on the Economy in Kansas City
- 14:00 (US) Beige Book
- 16:00 (CO) Colombia Feb PPI Domestic M/M: No est v % prior; Y/Y: No est v -1.3% prior
- 17:00 (US) Fed's Fisher speaks at Community Forum in El Paso, Texas
- 19:30 (AU) Australia Jan Retail Sales M/M: 0.4%e v 0.2% prior
- 19:30 (AU) Australia Jan Trade Balance (AUD): -925Me v -0.4B prior
- 20:00 (PH) Philippines Feb CPI M/M: 0.2%e v 0.4% prior; Y/Y: 2.5%e v 2.4% prior; CPI Core Y/Y: 2.4%e v 2.2% prior
- (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to raise Selic Target Rate by 50bps to 12.75%