Market Buzz Looking for Better-Than-Forecast U.S. Job Gains in March

April 1, 2011

Analysts have been projecting a 200K increase in nonfarm payroll jobs, but many market traders believe the figure may be closer to 300K than 200K.  The catalyst for these euphoric whisper numbers was an interview of Minneapolis Fed President Kocherlakota suggesting 50 basis points of rate tightening later this year.

The dollar is mixed on this first day of the second quarter, with gains of 0.5% against the yen, 0.4% versus the Swiss franc, and 0.2% against the kiwi but losses of 0.3% against the Aussie dollar, 0.2% versus the Canadian dollar, and 0.1% relative to sterling.  The dollar is unchanged against the euro and yuan.

Stocks posted solid advances, rising 1.5% in China, 1.2% in Hong Kong, 1.6% in Thailand, 2.1% in Sri Lanka, 1.8% in the Philippines, 0.7% in Malaysia, 0.6% in South Korea, and 0.5% in Australia and Singapore.  Japan’s Nikkei, an exception, fell 0.5%, and India’s bourse edged 0.1% lower.  But in Europe, the German Dax (0.9%), British Ftse (0.7%) and Paris Cac (0.6%) are all higher.

Sovereign bond yields have also firmed, rising five basis points for 10-year gilts, three bps for German bunds, and two bps in the case of Japanese JGBs.

Oil prices have risen 0.4% to a painful $107.15 per barrel of West Texas Intermediate crude.  Gold is 0.4% lower at a still-frothy $1434.90 per ounce.

The Bank of Japan’s quarterly Tankan corporate survey was quite upbeat.  Overall assessments for most classes of respondents went up, not down as predicted three months ago, but the report should be read with caution as it reflects pre-earthquake sentiment for the most part.  See my Tankan survey review.

A slew of manufacturing purchasing manager survey results were released.  Highlights include a weaker-than-assumed British outcome, a somewhat disappointing Australian and Chinese results, solid overall euro area activity masking a disparity among common currency area nations, and a rise in the South African index to a 13-month high.  Inflationary pressure intensified almost everywhere.

  • The British PMI for March printed at a five-month low of 57.1, 4.1 points weaker than in February.  This was still comfortably above the 51.3 long-term average reading, but new orders growth slowed.
  • The euro area manufacturing PMI was 57.5, 0.2 points less than the preliminary indication and 1.5 points below February’s more than ten-year high.  The German index (60.9) surpassed 60 for a fifth straight time.  The French index was revised down 1.2 points to 55.4.  Italy’s 56.2 reading was 2.8 points lower than in February.  Spain’s PMI (51.6) moved closer to the 50 line of neutrality between expansion and contraction.  Ireland’s score quickened to 57.7 from 56.7.  Greek activity fell more slowly with a sub-50 reading of 45.4 after 42.8 in February.  The Dutch reading of 58.1 fell between February’s 60.7 and January’s 57.5.
  • HSBC calculates a Chinese index of 51.8, just a tenth better than in February and well below January’s 54.5 or December’s 54.4.
  • India’s PMI held steady at 57.9, but prices touched another record high.
  • The Taiwanese PMI printed at 55.6 after 55.8 in February and 59.6 in January.
  • South Korea’s PMI slid to 52.8 from 53.4 in February and was the lowest score since 50.2 in November.
  • Australia’s PMI swung back below 50 to a score of 47.9 in March from 51.1 in February.  Such had been lower than 50 in November-January.
  • The Czech reading of 58.6, though below February’s 59.8 and January’s 60.5, was the fifth best ever.
  • Poland’s 54.8 reading was 1.0 higher than in February and compares to a long-term average score of 49.9.  Hungary scored a 53.8 after 56.9 in February.
  • The Danish 65.3 reading was very buoyant.  So were Sweden’s 58.6 and Norway’s 57.7.
  • The Swiss index settled back to 59.3 from 63.5, as growth in jobs, demand, and production were less rapid than in February.
  • The South African PMI shot up to 57.2 from 54.8 in February and 51.7 at the end of 2010.
  • Turkey’s 56.1 reading followed a record high of 58.5 set in February.
  • Russia’s 55.6 was associated with the second fastest rise in output prices since July of 2008.

Euroland’s jobless rate fell to 9.9% in February from three consecutive readings of 10.0%.  It was also 10.0% in February 2010.

Swiss retail sales volume was 1.5% greater in February than a year earlier.  Danish retail sales were 0.3% above their February 2010 level.

India’s trade deficit widened slightly to $8.1 billion in February from $7.9 billion the month before.  Indonesian CPI inflation slowed to 6.7% from 6.8% in March but core inflation edged a tenth higher to 4.5%.  South Korean CPI inflation rose to 4.7% in March from 4.5%.  Core CPI was at 3.3%. Thai consumer prices rose 3.1% in the year to March.

The United States releases the month jobs report at 12:30 GMT.  Other scheduled U.S. data include the manufacturing purchasing managers index, construction spending and motor vehicle sales.  Fed officials Dudley and Plosser have speaking engagements.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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