Market themes of the Day: On NFP day, watch wages for clues

What you need to know before markets open
Main themes:

  • Global stocks are selling off with European stock falling to a 2-year low after the worst trading day since February on Thursday.
  • The European Court of Justice will release its ruling on Article 50 of the Treaty of European Union on December 10 at 8:00 GMT, one day before the UK parliament votes on Brexit deal negotiated by the UK Prime Minister Theresa May. Earlier this week the ECJ aide said the UK could unilaterally revoke Article 50 if it chooses so. 
  • The European Union chief Brexit negotiator Michel Barnier said the Brexit deal on offer is the only one available for orderly withdrawal.
  • The Bank of Canada Governor Stephen Poloz said the pace of rate increases remains “decidedly data dependent” while repeating that the neutral rate for Canada is “in the neighborhood” of 2.50%-3.50%.
  • The US November labor market report including non-farm payrolls and the wage growth headlines the day. For details read Joseph’s Preview here.

Europe

  • The third-quarter GDP in the Eurozone is expected to confirm the preliminary reading of 0.2% Q/Q and 1.7% y/y increase.
  • The German ruling CDU party is set to choose a new leader as Angela Merkel said this is her last turn.

UK 

  • The European Court of Justice will release its ruling on Article 50 of the Treaty of European Union on December 10 at 8:00 GMT, one day before the UK parliament votes on Brexit deal negotiated by the UK Prime Minister Theresa May. Earlier this week the ECJ aide said the UK could unilaterally revoke Article 50 if it chooses so.
  • British Prime Minister Theresa May outlined the ultimatum for the December 11 parliamentary vote on Brexit deal saying either “it is my deal, no deal, or no Brexit at all” adding pressure on lawmakers.
  • Read the Contrarian view on December 11 Brexit vote and its effects on Sterling here.

US

  • The US initial jobless claims reached 231K in the week ending November 30.
  • The ADP employment report, the forerunner of Friday’s government non-farm payroll report saw 179K new jobs added in November, missing the market expectations of 195K.
  • The US ISM in non-manufacturing accelerated to 60.7 in November, exceeding expectations. 
  • Atlanta Federal Reserve President Raphael Bostic said he expects the economy to slow and the policy rates to gradually move to neutral.
  • The New York Federal Reserve President John Williams said the US tariffs overall do not have a big effect on growth and inflation while the sentiment is turning sour.
  • The Federal Reserve Chairman Jerome Powell said the US economy is performing very well though acknowledged that benefits are uneven.
  • The US non-farm payroll is expected to create 205K new jobs in November, down from rocking 250K in October. For details read Joseph’s Preview here.

Canada

  • The Bank of Canada Governor Stephen Poloz said the pace of rate increases remains “decidedly data dependent” while repeating that the neutral rate for Canada is “in the neighborhood” of 2.50%-3.50%.
  • Canada’s employment is expected to rise 10K in November with the unemployment rate remaining at 5.8%, but the further job creation is jeopardized by steep oil price fall. Find out more about the reasons behind Canada’s labor market limits in my Preview here
     

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