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Reporting on key macro data at the time of release.
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Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
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- MNI BRIEF: Powell Looking For Series of Strong Job Reports
- MNI INTERVIEW: Solid Wage Gains For Job Keepers-Atlanta Fed
- MNI INTERVIEW: US Wage Growth Hampered by Remote Work- ADP
- MNI REALITY CHECK: Canada Job Mkt Seen Lukewarm Amid Shutdowns
- U.S. CONSIDERING SENDING WARSHIPS INTO THE BLACK SEA: CNN
- German Chancellor Merkel: TOLD PUTIN TO REVERSE UKRAINE TROOP BUILDUP, Bbg
- U.S. SENATE BILL PROPOSES WORKING AGAINST CHINA IN INDO-PACIFIC, Bbg
- U.S. SHOULD PREVENT CHINA HEGEMONY IN INDO-PACIFIC, TEXT SAYS, Bbg
FED: Federal Reserve Chair Jay Powell said Thursday he's looking for several more strong job reports like the one from March before judging the economic recovery has shown progress toward full employment, adding that conditions remain uneven.
- "We got a taste of what faster progress will look like with the March employment report -- close to a million jobs, particularly if you add in the revisions for January and February -- and we want to see a string of ones like that so we can really begin to show progress toward our goals," he said at an IMF forum.
- A full economic reopening will be here "fairly soon" but the recovery "remains uneven and incomplete," with the unemployment rate for the bottom quartile of workers hovering at 20%, he said.
US: U.S. wage growth following the Covid-19 pandemic will be hampered as corporations look to cut costs by hiring remote workers in regions with lower salaries, ADP chief economist Nela Richardson told MNI.
- "I would expect that wages will continue to be slow in terms of growth if companies can now delegate, on the basis of workers' living preferences, how much they're going to pay for that flexibility," she said in an interview. For more see MNI Policy main wire at 0850ET.
- "For the workers who kept their jobs, wage growth is fine," he said in an interview. "Employers haven't frozen hourly rates of pay," like they did during the Great Recession, though weekly take-home pay did decline due to fewer hours worked. For more see MNI Policy main wire at 0929ET.
CANADA: Canadian firms are looking to hire as they rebuild production but a full recovery is unlikely in 2021 as pandemic restrictions temper demand and make it difficult to recruit workers, industry sources told MNI.
- Canadian payrolls are seen rising by 90,000 in March, lowering the unemployment rate to 8% from 8.2%, according to an economist consensus ahead of a Statistics Canada report due Friday at 8:30 EST. That's a slowdown from the gain of 259,200 jobs in February when governments were relaxing health restrictions. Even with renewed curfews and stay-at-home orders this month, firms still expressed optimism about continued hiring gains. For more see MNI Policy main wire at 1305ET.
US JOBLESS CLAIMS +16K TO 744K IN APR 03 WK
US PREV JOBLESS CLAIMS REVISED TO 728K IN MAR 27 WK
US CONTINUING CLAIMS -0.016M to 3.734M IN MAR 27 WK
U.S. WEEKLY LANGER CONSUMER COMFORT INDEX AT 51.9 VS 50.0
Key late session market levels
- DJIA up 18.4 points (0.06%) at 33463.66
- S&P E-Mini Future up 17.25 points (0.42%) at 4087.25
- Nasdaq up 131.2 points (1%) at 13819.59
- US 10-Yr yield is down 4.1 bps at 1.6333%
- US Jun 10Y are up 5/32 at 131-31.5
- EURUSD up 0.0047 (0.4%) at 1.1915
- USDJPY down 0.61 (-0.56%) at 109.24
- WTI Crude Oil (front-month) down $0.2 (-0.33%) at $59.57
- Gold is up $17.28 (0.99%) at $1754.97
European bourses closing levels:
- EuroStoxx 50 up 21.06 points (0.53%) at 3977.83
- FTSE 100 up 56.9 points (0.83%) at 6942.22
- German DAX up 26.32 points (0.17%) at 15202.68
- French CAC 40 up 35.06 points (0.57%) at 6165.72
Rates traded sideways after the long Bond hit session highs around 1000ET Thu, moderately bid near top end of range on rather subdued volumes, TYM1 just over 985k after the close. S&P eminis trading firmer but off new all-time high 4092.75 tapped overnight.
- No significant market reaction to weekly claims: +16k to 744k, continuing claims -0.016M to 3.734M. But rates did climb to session highs by midmorning, partially tied to safe haven buying due to increasing geopolitical tensions between Russia and Ukraine as the former builds up military presence near Donbass region.
- News wires reported German Chancellor Merkel "TOLD PUTIN TO REVERSE UKRAINE TROOP BUILDUP" Bbg around the time. Not eliciting much additional safe haven support, but late CNN headline report U.S. CONSIDERING SENDING WARSHIPS INTO THE BLACK SEA. Which makes some wonder why equities can continue to make new highs if a hot war in the region is a real concern.
- Fed speak: Fed Chair Powell at IMF virtual forum, is looking for several more strong job reports like last Fri's (+916k for Mar) before judging the economic recovery has shown progress toward full employment, adding that conditions remain uneven.
- MN Fed Pres Kashkari raised a few eyebrows late in day that "he would not panic if he saw a 4% inflation rate" DJ while tolerating "near-term inflation overshoot", Bbg.
- The 2-Yr yield is down 0.6bps at 0.1468%, 5-Yr is down 3.1bps at 0.8383%, 10-Yr is down 4.4bps at 1.6298%, and 30-Yr is down 4.4bps at 2.3176%.
US TSY FUTURES CLOSE
- 3M10Y -4.16, 161.708 (L: 161.101 / H: 165.007)
- 2Y10Y -3.824, 148.098 (L: 147.745 / H: 151.765)
- 2Y30Y -3.455, 217.272 (L: 216.421 / H: 220.612)
- 5Y30Y -0.99, 148.153 (L: 147.276 / H: 149.497)
- Current futures levels:
- Jun 2Y up 0.125/32 at 110-12.25 (L: 110-12 / H: 110-12.5)
- Jun 5Y up 2.25/32 at 123-28.25 (L: 123-23.25 / H: 123-29.25)
- Jun 10Y up 6/32 at 132-0.5 (L: 131-21 / H: 132-01)
- Jun 30Y up 13/32 at 156-25 (L: 155-30 / H: 156-31)
- Jun Ultra 30Y up 17/32 at 185-7 (L: 183-24 / H: 185-18)
US EURODOLLAR FUTURES CLOSE
- Jun 21 steady at 99.825
- Sep 21 steady at 99.810
- Dec 21 steady at 99.735
- Mar 22 +0.005 at 99.770
- Red Pack (Jun 22-Mar 23) +0.005 to +0.025
- Green Pack (Jun 23-Mar 24) +0.020 to +0.030
- Blue Pack (Jun 24-Mar 25) +0.035 to +0.055
- Gold Pack (Jun 25-Mar 26) +0.055 to +0.065
Short Term Rates
US DOLLAR LIBOR: Latest settles
- O/N -0.00137 at 0.07488% (+0.00013/wk)
- 1 Month -0.00200 to 0.11050% (+0.00012/wk)
- 3 Month -0.00588 to 0.18775% (-0.01200/wk) (Record Low of 0.17525% on 2/19/21)
- 6 Month +0.00075 to 0.21075% (+0.00950/wk)
- 1 Year +0.00150 to 0.28675% (+0.00625/wk)
- Daily Effective Fed Funds Rate: 0.07% volume: $73B
- Daily Overnight Bank Funding Rate: 0.06%, volume: $256B
- Secured Overnight Financing Rate (SOFR): 0.01%, $924B
- Broad General Collateral Rate (BGCR): 0.01%, $366B
- Tri-Party General Collateral Rate (TGCR): 0.01%, $341B
- (rate, volume levels reflect prior session)
- TIPS 1Y-7.5Y, appr $2.401B accepted vs. $4.808B submission
- Next scheduled purchase:
- Fri 4/09 1010-1030ET: Tsy 7Y-20Y, appr $3.625B
- Date $MM Issuer (Priced *, Launch #)
- 04/08 $5B *KFW 2Y -2
- 04/08 $4.1B #Organon $2.1B 7NC3 4.125%, $2.0B 10NC 5.125%
- 04/08 $4B #Japan Bank of Int Cooperation (JBIC) WNG $1B 3Y +4, $3B 10Y +24
- 04/08 $1B #MassMutual $400M 3Y +32, $600M 3Y FRN SOFR+36
- 04/08 $1B #Canadian Pension Plan (CPPIB) WNG 3.5Y +1
- 04/08 $920M #Sumitomo Life Insurance 60NC10 3.375%
- 04/08 $500M *AIIB WNG 5Y FRN SOFR+22
- The greenback faded further Thursday, prompting the USD index to retreat further below the 200-dma and narrow in on next support at 91.50. The move was mirrored in EUR/USD, which climbed to the best levels of the month and extended the recovery from last week's lows to close to 2%. 1.1975 is the next level of interest, despite some sell-side analysts now citing the EUR strength as over-done in the near-term.
- Initial weekly jobless claims came and went with little focus, despite the numbers coming in above expectations. Some WMR fix related demand for the greenback was also well absorbed, keeping focus on Fedspeak and the continued strength in the US vaccine programme relative to the UK & EU rollout.
- USD and NOK were the session's poorest performers, while SEK and CHF traded well.
- Focus Friday turns to Chinese inflation data, with both PPI and CPI numbers expected to shoot higher. German & French industrial production data is also due in Europe, followed by US PPI and the Canadian jobs report. ECB's de Guindos and Fed's Kaplan are the only central bank speakers of note.
Though few themes stood out Thursday, core FI was in favour in the afternoon, handily reversing early losses. Gilts saw steady gains all day with bull flattening in the curve, outperforming Bunds.
- Italy outperformed in the space as a whole, though beyond BTPs, periphery EGB spreads were mixed.
- German Feb factory orders data missed slightly. Little impact from ECB meeting minutes (Gov Council saw broad consensus for PEPP pace pickup). BoE's Tenreyro told the FT that negative rates would work in the UK.
- Today saw supply from Spain, France and the UK. EU sent an RfP for E5bn in funding in coming weeks.
- Friday sees some industrial production / retail sales data, and ECB's de Guindos speaks.
Closing yields/10-Yr Spreads to Bunds:
- Germany: The 2-Yr yield is down 1.1bps at -0.714%, 5-Yr is down 1.1bps at -0.668%, 10-Yr is down 1.2bps at -0.336%, and 30-Yr is down 0.7bps at 0.224%.
- UK: The 2-Yr yield is down 1.8bps at 0.046%, 5-Yr is down 1.8bps at 0.34%, 10-Yr is down 2.4bps at 0.749%, and 30-Yr is down 3.1bps at 1.284%.
- Italian BTP spread down 1.9bps at 99.8bps / Spanish spread up 0.4bps at 67bps