MNI US OPEN - Superbad

NEWS

US (Reuters): Must has "super bad" feeling about the economy
Tesla CEO Musk said the carmaker needs to "make a roughly 10% reduction in staff," according to an email sent to executives on Thursday and seen by Reuters.- In the email titled "pause all hiring worldwide," he said: "I have a super bad feeling about the economy."

US (MNI): Nonfarm payrolls seen at 325k in May as the pace eases further from 428k in both March and April, down from the 600k in the prior six-month average but still twice the pace of the monthly gain through 2019. Inflation concerns clearly remain key though so it’s not the rate of jobs growth as much as labour market tightness that continues to matter. Consensus has average hourly earnings growth firming to +0.4% M/M some analysts below note downside risk from a calendar quirk. A payrolls miss has potential to drive a sizeable bear flattening if combined with limited rises in labour supply, a lower or stable u/e rate and still strong wage growth.
Full MNI Preview here: https://marketnews.com/mni-us-payrolls-preview-sof...

CHINA (BBG): Shanghai Boosts Testing Amid Uptick in Cases Outside Quarantine
China’s financial capital is bolstering its Covid-19 testing capacity as cases reappear in the community and residents start to move around more freely after the easing of most lockdown curbs. Shanghai reported 16 new Covid infections for Thursday, seven of them outside government mandated quarantine -- the highest tally of so-called community cases since officials started to loosen restrictions last month after declaring an end to community spread.

UKRAINE/RUSSIA (Reuters) - Defence Minister says had "some success" in Sievierodonetsk
The Ukrainian defence minister said Kyiv had "some success" in Sievierodonetsk, adding that talk of a "de facto" Ukraine membership of NATO summit could be part of the upcoming summit. The minister added that he hopes Ukraine can kick out Russians from occupied territories this year.

DATA

MNI: EUROZONE FINAL MAY SERVICES PMI 56.1R; APR 57.7
GERMANY FINAL MAY SERVICES PMI 55.0R; APR 57.6
FRANCE FINAL MAY SERVICES PMI 58.3R; APR 58.9
ITALY MAY SERVICES PMI 53.7 (FCST 54.5); APR 55.7
SPAIN MAY SERVICES PMI 56.5 (FCST 56.0); APR 57.1

FRANCE APR MANUFACTURING -0.4% M/M, +0.8% Y/Y; MAR -0.2%R M/M

MNI: EZ APR RETAIL SALES -1.3% M/M, +3.9% Y/Y; MAR +1.6%r Y/Y
EUROZONE MAR RETAIL Y/Y REVISED UP 0.8PP

FOREX: USD Index Again Finds Support at 50-dma

• Currency markets are treading water early Friday, with a second UK public holiday and pre-NFP trade keeping volumes, liquidity and price action generally light. The greenback is modestly firmer, but gains are muted as the USD Index finds support again at the 50-dma (currently crossing at 101.65).
• JPY is one of the poorer performers in FX space, with USD/JPY just through the overnight highs ahead of the NY crossover. Potential is seen for a continuation higher. Price remains above the 50-day EMA, at 126.49 today. This week's move higher signals the end of a recent corrective pullback and highlights the point that corrections in USDJPY are shallow - a bullish signal. The move higher signals scope for a climb towards the bull trigger at 131.35, May 9 high.
• Nonfarm payrolls seen at 325k in May as the pace eases further from 428k in both March and April, down from the 600k in the prior six-month average but still twice the pace of the monthly gain through 2019. Inflation concerns clearly remain key though so it’s not the rate of jobs growth as much as labour market tightness that continues to matter.

BOND SUMMARY: Yields remain elevated in Europe

• A very quiet start for cross assets, but EGBs and German are nonetheless still elevated and multi year highs.
• Peripheral spread are all tighter against the German 10yr.Greece is in the lead by 2.8bps.
• French, German and EU final CPIs were revised lower, but had no impact on markets.
• Looking ahead, US NFP and ISM Services Index will be in focus.
• SPEAKERS; Include ECB Holzmann and Fed Brainard (Discusses community reinvestment Act).
• US Treasuries are stable, with Tnotes flat on the day, ahead of the Data.
• June contract:
• Bund futures are down -0.22 today at 150.04 with 10y Bund yields up 1.1bp at 1.245% and Schatz yields up 0.4bp at 0.617%.
• BTP futures are down -0.04 today at 125.53 with 10y yields down -0.1bp at 3.295% and 2y yields up 0.7bp at 1.154%.
• OAT futures are down -0.28 today at 142.58 with 10y yields up 1.7bp at 1.774% and 2y yields up 0.1bp at 0.450%.