Today focus will be on the US labour market report for February

Market Movers

• Today focus will be on the US labour market report for February. We expect non-farm payrolls increased 160,000, below consensus of 195,000. Our forecast for employment growth is still faster than the trend growth in the labour force putting additional downward pressure on the unemployment rate. Key for the Fed is average hourly earnings, which have moved higher recently, and hence bolstered the Fed’s confidence in the inflation outlook. However, the latest decline in both market- and survey-based inflation expectations has spooked some at the Fed.

• Over the weekend, the annual meeting of China’s National People’s Congress (NPC) starts. Here, China is set to announce its plans to revive growth and map out economic goals for the next five years. The biggest take-away from the NPC is usually the GDP target but reforms to rebalance the economy will also be in focus.

• In Sweden industrial and service production for January are due for release, see Scandi Markets.

Selected Market News

Germany and France find common ground in campaigning against Brexit. France’s president Hollande warned of ‘consequences’ if the UK leaves the EU and hinted that the UK might be forced to deal with migrants in Dover instead of having controls in Calais. German finance minister Schäuble added that the UK could face trade restrictions with EU if it left, hence also trying to support the pro-EU campaign. According to one of six cabinet ministers for a Brexit, the comments reflect the EU elite teaming up with big business to try to get a vote to stay in the EU, see FT.

The oil price is trading higher this morning. According to Nigeria’s petroleum minister key members of OPEC intend to meet with non-members in Russia on 20 March to renew talks on an agreement to cap oil output. Nigeria’s petroleum minister said there will be a ‘dramatic price movement’ adding that producers generally seek a recovery in the crude price to USD50/bl. Russia has confirmed its readiness to participate in the talks but the date of the meeting is still being discussed, see Bloomberg.

European inflation markets got some support yesterday. ECB’s preferred measure for medium-term inflation expectations, the 5y5y inflation swap traded at 1.48% up from 1.38% two days earlier. There was no obvious catalyst behind the rally, but it could reflect some investors expecting aggressive easing from the ECB at the meeting next week. Ahead of the rally, levels were very depressed and inflation markets seemed somewhat decoupled from other assets, where easing from the ECB is clearly priced.

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