Waiting for US jobs report with annual revisions

EU mid-market update: Waiting for US jobs report with annual revisions; Amazon goes big on AI investments despite soft guidance.

Notes/observations

- European indices trade flat to slightly lower as market waits on US jobs report for clues on the Fed's next moves. CAC 40 hovered near an eight-month high, supported by a narrowing French trade deficit, which fell to €3.9 billion in December (smallest gap since November 2020). Corporate earnings weighed on sentiment, with L'Oréal and Pernod Ricard declining on weak China demand and tariff uncertainties. DAX held near all-time highs despite a sharper-than-expected 2.4% drop in German industrial production in December, driven by declines in automotive and machinery output. Porsche AG tumbled after disappointing 2025 sales guidance; FTSE MIB traded flat after hitting its highest level since January 2008. Bper Banca fell following a €4.3B all-share bid for Banca Popolare di Sondrio, while Iveco Group soared on strong 2024 results and a dividend announcement. In UK, Legal & General surged after announcing the sale of its US protection arm and a share buyback, while miners like Fresnillo and Anglo American gained on rising metal prices. UK house prices rose 0.7% in January, hitting a record £299K, with annual growth slowing to 3.0% (weakest pace since July). Halifax noted that strong mortgage demand and supply shortages are supporting modest price growth despite affordability challenges.

- US Nonfarm Payrolls is expected at +175K (analyst range +135-200K), which would be slowest pace in 3 months and down from December’s 256K gain. Wildfires in Los Angeles and harsh winter conditions likely weighed on job growth, though the unemployment rate is projected to hold steady at 4.1%. Wage growth is forecast at 0.3% month-over-month, matching December’s pace, but annual wage growth is expected to dip slightly to 3.8%. The report will also include annual benchmark revisions, which could significantly alter previous employment figures.

- Markets also await an ECB report on the neutral rate for an idea just how far rate could fall.

- Two recent experiments on twisted multilayer graphene have provided key insights into its unconventional superconductivity, potentially advancing the quest for room-temperature superconductors. New findings revealed that in bilayer graphene, superconducting currents exhibit unexpected stiffness due to quantum geometric effects, while trilayer graphene shares similarities with high-temperature superconductors, hinting at universal quantum laws.

- Asia closed mixed with Hang Seng outperforming +1.2%. EU indices -0.1% to +0.3%. US futures -0.1% to +0.1%. Gold +0.5%, DXY 0.0%; Commodity: Brent +0.9%, WTI +1.0%; Crypto: BTC -1.3%, ETH -4.0%.

Asia

- Japan Dec Household Spending Y/Y: 2.7% v 0.5%e.

- India Central Bank (RBI) cuts Repurchase Rate by 25bps to 6.25% (as expected) as it moved into easing with its 1st rate cut since pandemic (May 2020).

- IMF Japan Mission Chief Choueiri stated that it expected BOJ to raise rates again this year to reach neutral by end ’27. Saw neutral rate to be in a band of 1% to 2% with a mid-point of 1.5% (**Note: currently at 0.50%).

Europe

- Reform of Germany’s debt brake may rattle global bond markets; a rise in Bund yields could pressure global markets - FT opinion piece.

- Bank for International Settlements (BIS) said to warns about risks to economies and central bank policies due to uncertainties over Pres Trump.

Americas

- Fed's Logan (non-voter) noted that trade policy and volatile financial conditions would add to uncertainties; Fed's path should be guided by need to keep inflation expectations anchored. Reaching 2% inflation did not imply that rate cuts would be necessary.

- President Trump said to have a desire to end the special tax treatment of private equity and hedge fund profits, known as "carried interest," in a White House meeting with Republican leaders.

- House Republicans said to be close in on budget deal after meeting Pres Trump; a deal could be announced as soon as Friday (today).

- Bank of Canada (BOC) Gov Macklem stated that the world looked increasingly shock prone; Trade protectionism compounded vulnerabilities.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.10% at 544.28, FTSE -0.18% at 8,711.77, DAX +0.03% at 21,919.82, CAC-40 -0.09% at 8,000.50, IBEX-35 -0.24% at 12,708.14, FTSE MIB -0.21% at 37,044.00, SMI +0.18% at 12,639.60, S&P 500 Futures -0.05%].

Market Focal Points/Key Themes: European indices open mixed and failed to gain direction in the early hours of trading; among outperforming sectors are utilities and financials; underperforming sectors include consumer discretionary and health care; oil & gas subsector under pressure with crude set for third week of declines; Legal & General to sell its US protection business to Meiji Yasuda; reportedly Iliad looking to increase stake in Telecom Italia focus on upcoming US NFP figures later int he day; earnings expected in the upcoming Americas session include Newell Brands.

Equities

- Financials: Danske Bank [DANKSE.DK] +6.5% (FY results), Banco Sabadell [SAB.ES] -1.0% (Q4 results).

- Materials: Yara International [YAR.NO] -7.0% (earnings).

- Industrials: Vinci [DG.FR] +3.5% (earnings; new CFO), Skanska [SKAB.SE] +5.5% (Q4 results), Saab [SAABB.SE] -3.5% (Q4 results), Iveco Group [IVG.IT] +14.0% (earnings).

- Telecom: Telecom Italia [TIT.IT] +2.0% (Iliad has given mandate to Boston Consulting Group to explore potential consolidation with Telecom Italia - press).

Speakers

- ECB Chief Economist Lane (Ireland) noted that the 2% inflation target to be achieved 'fairly soon' in spring. Best not to focus too much on neutral rate.

- ECB’s De Guindos (Spain) reiterated view that services inflation remained top price concern. Needed prudent approach to monetary policy.

- Turkey Central Bank (CBRT) Gov Karahan commented that rate cuts to depend on inflation outlook. Might assess pausing cuts if needed.

Currencies/fixed income

- USD was steady ahead of the highly watched US jobs report due out later today. Overall dealers believe that USD declines could be limited against European currencies due to expectations for more rate cuts compared with the FED coupled along with safe-haven demand.

- EUR/USD holding around the 1.04 level as market participants await an ECB report on the neutral rate for an idea just how far rate could fall.

- GBP/USD moved off its post BOE rate cut low to trade around 1.2470 area. Pound currency found some relief after Gov Bailey cautioned against reaction to the vote split that included former hawk Mann voting for a 50bps decrease.

- USD/JPY continued its downward bias for the week as Yen was aided by more positive Japanese data (Household spending beat consensus). The Japan 10-year JGB yield rose to test 1.300% for its highest level since Apr 2011.

- EU bond yields were lower by 1bp in the session. 10-year Bunds at 2.36% while the 10-year Gilt tested 4.46%.

Economic data

- (SE) Sweden Jan Maklarstatistik Housing Prices: 4.2% v 5.0% prior.

- (ZA) South Africa Jan Net Reserves: $61.2B v $61.1Be; Gross Reserves: $65.9B v $65.5B prior.

- (UK) Jan Halifax House Price Index M/M: +0.7% v -0.2% prior; Y/Y: 3.0% v 3.3% prior.

- (DE) Germany Dec Industrial Production M/M: -2.4% v -0.7%e; Y/Y: -3.1% v -2.1%e.

- (DE) Germany Dec Trade Balance: €20.7B v €17.0Be; Exports M/M: +2.9% v -0.5%e; Imports M/M: 2.1% v 1.9%e.

- (SE) Sweden Jan Budget Balance (SEK): -23.3B v -127.2B prior.

- (NO) Norway Dec Industrial Production M/M: -0.2% v +0.2% prior; Y/Y: 0.3% v 0.5% prior.

- (NO) Norway Dec Manufacturing Production M/M: 3.2% v 1.2% prior; Y/Y: 5.0% v 1.4% prior.

- (DK) Denmark Dec Industrial Production M/M: +4.0% v -4.6% prior.

- (MY) Malaysia end-Jan Foreign Reserves: $116.4B v $115.5B prior.

- (CN) Weekly Shanghai Copper Inventories (SHFE): 184.8K v 98.0K tons prior (**Note: note released prior to LNY holiday).

- (TH) Thailand May Foreign Reserves w/e Jan 31st: $242.1B v $241.8B prior.

- (FR) France Dec Trade Balance: -€3.9B v -€6.3B prior; Current Account: +€2.4B v -€1.2B prior.

- (FR) France Q4 Preliminary Wages Q/Q: 0.4% v 0.3%e; Private Sector Payrolls Q/Q: -0.2% v -0.1%e.

- (ES) Spain Dec Industrial Production M/M: 0.9% v 0.3%e; Y/Y: 2.1% v 0.7%e; Industrial Output NSA (unadj) Y/Y: +4.7% v -3.6% prior.

- (CH) Swiss Jan SECO Consumer Confidence: -29.3 v -30.5e.

- (CH) Swiss Jan Foreign Currency Reserves (CHF): 736.4B v 730.9B prior.

- (AT) Austria Jan Wholesale Price Index M/M: +1.5% v -0.1% prior; Y/Y: 1.5% v 0.9% prior.

- (RU) Russia Narrow Money Supply w/e Jan 31st (RUB): 18.27T v 18,39T prior.

- (TW) Taiwan Jan CPI Y/Y: 2.7% v 2.5%e; CPI Core Y/Y: 2.3% v 2.2%e; PPI Y/Y:3.9% v 3.1% prior.

- (TW) Taiwan Jan Trade Balance: $10.0B v $4.6Be; Exports Y/Y: 4.4% v 5.8%e; Imports Y/Y: -17.2% v +0.7%e.

- (CN) China Jan Foreign Reserves: $3.209T v $3.196Te.

- (HK) Hong Kong Jan Foreign Reserves: $421.5B v $421.5B prior.

- (UN) Jan FAO World Food Price Index: 124.9 v 127.0 prior.

- (CZ) Czech Jan International Reserves: $146.7B v $146.3B prior.

- (SG) Singapore Jan Foreign Reserves: $376.7B v $371.4B prior.

- (IN) India Forex Reserve w/e Jan 31st: $630.6B v $629.6B prior.

Fixed income issuance

- (IN) India sold total INR220B vs. INR220B in 2039 and 2054 bonds.

- (ZA) South Africa sold total ZAR310M vs. ZAR1.0B indicated in I/L 2033, 2038 and 2050 bonds.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 06:00 (IE) Ireland Dec Industrial Production M/M: No est v -5.9% prior; Y/Y: No est v -6.0% prior.

- 06:00 (BR) Brazil Jan FGV Inflation IGP-DI M/M: 0.1%e v 0.9% prior; Y/Y: 7.2%e v 6.9% prior.

- 06:00 (CL) Chile Jan CPI M/M: +1.0%e v -0.2% prior; Y/Y: 4.8%e v 4.5% prior.

- 06:00 (UK) DMO to sell £4.5B in 1-month, 3-month and 6-month bills.

- 06:00 (BE) Belgium Debt Agency (BDA) to sell Bonds through Ori Auction.

- 06:30 (CL) Chile Jan Trade Balance: $3.1Be v $2.4B prior; Total Exports: No est v $9.4B prior; Total Imports: No est v $7.0B prior; Copper Production: No est v $4.7B prior.

- 06:30 (CL) Chile Jan International Reserves: No est v $44.4B prior.

- 07:00 (MX) Mexico Jan CPI M/M: 0.3%e v 0.4% prior; Y/Y: 3.6%e v 4.2% prior.

- 07:00 (MX) Mexico Jan CPI Core M/M: 0.5%e v 0.5% prior; Y/Y: 3.7%e v 3.7% prior.

- 07:00 (EU) ECB Staff Note on Neutral Rate.

- 07:15 (UK) BOE’s Pill (chief economist).

- 07:30 (IS) Iceland to sell 2027 and 2042 RIKB Bonds.

- Sells ISK in Apr 2027 RIKB Bonds; Avg Yield: % v 7.600% prior; Bid-to-cover: x v 1.30x prior (Jan 10th 2025).

- Sells ISK in Feb 2042 RIKB bond; Avg Yield: % v 6.580% prior, Bid-to-cover: x v 1.91x prior (Aug 9th 2024).

- 07:30 (IN) India announces upcoming bill issuance (held on Wed).

- 08:00 (RU) Russia Jan Official Reserve Assets: No est v $609.1B prior.

- 08:00 (PL) Poland Jan Official Reserves: No est v $223.3B prior.

- 08:00 (PL) Poland Central Bank (NBP) Jan Minutes (2 decisions ago).

- 08:00 (BR) Brazil Jan Vehicle Production: No est v 190.1K prior; Vehicle Sales: No est v 257.4K prior ; Vehicle Exports: No est v 31.4K prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Jan Change in Nonfarm Payrolls: +170Ke v +256K prior; Private Payrolls: +150Ke v +223K prior; Manufacturing Payrolls: -2Ke v -13K prior.

- 08:30 (US) Jan Unemployment Rate: 4.1%e v 4.1% prior; Underemployment Rate: No est v 7.5% prior; Participation Rate: 62.5%e v 62.5% prior.

- 08:30 (US) Jan Average Hourly Earnings M/M: 0.3%e v 0.3% prior; Y/Y: 3.8%e v 3.9% prior; Avg Weekly Hours All Employees: 34.3e v 34.3 prior.

- 08:30 (CA) Canada Jan Net Change in Employment: +25.0Ke v +91.0K prior (revised from 90.9K); Unemployment Rate: 6.8%e v 6.7% prior; Full Time Employment Change: No est v +59.1K prior (revised from +57.5K); Part Time Employment Change: No est v +31.8K prior (revised from +33.5K); Participation Rate: 65.4%e v 65.4% prior (revised from 65.1%); Hourly Wage Rate: 3.8%e v 3.7% prior.

- 09:25 (US) Fed’s Bowman.

- 10:00 (US) Feb Preliminary University of Michigan Confidence: 71.7e v 71.1 prior.

- 10:00 (US) Dec Final Wholesale Inventories M/M: -0.5%e v -0.5% prelim; Wholesale Trade Sales M/M: 0.5%e v 0.6% prior.

- 11:00 (RU) Russia 2024 Annual GDP (1st of 3 readings) Y/Y: No est v 3.6% prior.

- 11:00 (RU) Russia Dec Real Retail Sales Y/Y: 6.5%e v 6.0% prior.

- 11:00 (RU) Russia Dec Unemployment Rate: 2.4%e v 2.3% prior.

- 11:00 (RU) Russia Nov Real Wages Y/Y: 6.9%e v 7.2% prior.

- 11:35 (JP) Japan PM Ishiba to meet US Pres Trump.

- 12:00 (US) Fed’s Kugler.

- 12:00 (EU) Potential sovereign ratings after European close (Fitch on Belgium, Finland; S&P on Switzerland; Moody's on Ireland).

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 13:00 (BR) Brazil Jan Monthly Trade Balance: $3.0Be v $4.8B prior; Total Exports: $26.3Be v $24.9B prior; Total Imports: $23.4Be v $20.1B prior.

- 14:00 (AR) Argentina Dec Industrial Production Y/Y: No est v -1.7% prior; Construction Activity Y/Y: No est v -23.6% prior.

- 15:00 (US) Dec Consumer Credit: +$16.5Be v -$7.5B prior.

- 18:00 (CO) Colombia Jan CPI M/M: 0.8%e v 0.5% prior; Y/Y: 5.1%e v 5.2% prior.

- 18:00 (CO) Colombia Jan CPI Core: M/M: 0.8%e v 0.4% prior; Y/Y: 5.4%e v 5.7% prior.

Weekend

(CN) China Jan CPI Y/Y: 0.4%e v 0.1% prior; PPI Y/Y: -2.2%e v -2.3% prior.