US Credit Mkt Wk Ahd: Headline Feb Payrolls, Wage Data Friday

     CHICAGO (MNI) - After a slow start, the week ahead hosts a slew of data

culminating in Friday's wage data in the payroll report for February. Aside from

several speakers from the Federal Reserve, data includes February ISM-services

Monday, January factory orders Tuesday, Beige Book on Wednesday along with ADP

private employment data, and flow of funds on Thursday.

     A Market News International survey has a mean estimate of a rise of 210k

jobs vs. 200k in the prior release (private payrolls estimate of 195k vs. 196k

prior), steady unemployment at 4.1% and average hourly earnings estimate of

+0.2% vs. +0.3% prior.

     TD Securities economists "expect wages to disappoint, which can reduce some

enthusiasm for a faster pace of hikes."

     Last week Thursday's seemingly off-the-cuff announcement by U.S. President

Trump that he intends to impose a 25% tariff on steel imports and 10% on

aluminum is still being debated by markets and is likely to continue to roil

markets until more concrete intentions are announced.

     In TD's opinion, the "import tariffs could create upward pressure on

prices, but will may be perceived as a stag-flationary shock. This should

continue to weigh on risk assets, which can ultimately put a cap on how high

rates can rise. We nevertheless expect short-dated TIPS breakevens to remain

supported on the news."

     On the upcoming data, TD expects a "slower 0.2% m/m wage print in February"

while "headline payrolls are likely to remain solid, but we also look for a

below-consensus 175k February gain - disappointing market expectations at 200k."

     After last week's inaugural semi-annual monetary policy testimony for

Federal Reserve chairman Jerome Powell, MUFG analyst Christopher Rupkey said the

initially hawkish testimony "got markets thinking the Fed would raise the

forecast to four rate hikes in 2018, but bond yields only made it as high as

2.92% on the news."

     The upcoming February employment data "along with the 2.9% average hourly

earnings 'wages' from last month is make or break for the upward trend in

yields. Need more hot data to keep the inflation scare alive," MUFG added.

     Scotiabank economists will be focusing on Friday's wage data. "Recall it

accelerated in January to 2.9% y/y which was the highest since 2009. Fed Chair

Powell dismisses wage pressures and he's generally right to do so if we're

talking unit labour costs that essentially amount to productivity adjusted wage

pressures."

     Scotiabank suspects markets will "see a lower wage growth print next week

as the January reading benefited from year-ago base effects that became less

favourable in February."

     JP Morgan economists posit the "employment report is likely to show

payrolls rose by 225k in February, we also project the unemployment rate held

unchanged at 4.1% and average hourly earnings increased just 0.2% over the

month, which should ease fears of further acceleration in wage growth following

outsized strength in the prior three months."

     On President Trump's metals tariffs, JP Morgan estimates import tariffs are

"likely to have a negligible impact on growth, as aluminum and steel imports

account for less than 0.2% of GDP, but the developments are moving in a

direction that is a little worse than we had previously assumed, and retaliatory

efforts from other countries present a risk as well."

     Meanwhile, there are several Federal Reserve speaker engagements ahead the

communication period blackout from the Fed that starts Saturday, March 10 ahead

the two-day FOMC meeting on March 20-21 (includes Summary of Economic

Projections and a press conference by the Chair).

     On Monday, March 5, Federal Reserve Vice Chairman Randal Quarles to discuss

foreign bank regulation at the "Institute of International Bankers Annual

Washington Conference" in Washington, DC, with audience Q&A.

     Tuesday March 6, Federal Reserve Governor Lael Brainard to speak about the

economic and monetary policy outlook at the "Money Marketeers Forum" in New York

City, with audience Q&A.

     Also on Tuesday, Dallas Federal Reserve Bank President Rob Kaplan to

participate in a moderated Q&A at the CERA Week in Houston, with audience and

media Q&A.

     Wednesday March 7, Atlanta Federal Reserve Bank President Raphael Bostic to

speak at the Fireside Chat to the Broward Workshop in Fort Lauderdale, FL, with

audience and media Q&A.

     Friday March 9, Chicago Federal Reserve Bank President Charles Evans to

speak at the Manhattan Institute Shadow Open Market Committee in New York, with

audience and media Q&A.

     The Federal Reserve also continues to gradually reduce its $4.5 trillion

balance sheet ($4.2 trillion in U.S. Treasuries and Agency MBS.) Monthly Fed

reinvestment caps consistent with the FOMC Sept. 20 decision and June 2017

addendum:

MONTHLY CAPS ON SOMA SECURITIES REDUCTIONS

US TREASURIES.../AGENCY MBS/MONTH CAP 

- Oct-Dec 2017.. $6 billion./$4 billion 

- Jan-Mar 2018.. $12 billion/$8 billion 

- Apr-Jun 2018 $18 billion../$12 billion 

- Jul-Sep 2018 $24 billion../$16 billion 

- From Oct 2018** $30 billion $20 billion

Calendar of next week's market events (data, Fed speakers): 

- Mar 05 Feb Markit Services Index (final) (55.9, --) 0945ET

- Mar 05 Feb ISM Non-manufacturing Index (59.9, 58.8) 1000ET

- Mar 05 US Tsy $51B 3M bill auction, 1130ET

- Mar 05 US Tsy $45B 6M bill auction, 1130ET

- Mar 05 Fed Vice Chair Quarles to discuss foreign bank regulation at the

"Institute of International Bankers Annual Washington Conference" in Washington,

DC, with audience Q&A. 1315ET

- Mar 06 03-Mar Redbook retail sales m/m (-0.6%, --) 0855ET

- Mar 06 Jan factory new orders (1.7%, -1.0%) 1000ET

- Mar 06 Jan factory orders ex transport (0.7%, --) 1000ET

- Mar 06 Mar IBD/TIPP Optimism Index (56.7, --) 1000ET

- Mar 06 US Tsy 1M bill auction, 1130ET

- Mar 06 Feb Treasury STRIPS Holdings 1500ET

- Mar 06 Fed Gov Brainard on economic and mon/pol outlook at "Money Marketeers

Forum" in New York City, with audience Q&A. 1900ET

- Mar 06 Dallas Fed Pres Kaplan participation moderated Q&A at CERA Wk in

Houston, with audience and media Q&A. 2030ET

- Mar 07 02-Mar MBA Mortgage Applications (2.7%, --) 0700ET

- Mar 07 Atlanta Fed Pres Bostic Fireside Chat, Broward Workshop in Fort

Lauderdale, FL, audience & media Q&A. 0800ET

- Mar 07 Feb ADP private payrolls (234k , --) 0815ET

- Mar 07 Q4 non-farm productivity (f) (-0.1%, 0.2%) 0830ET

- Mar 07 Q4 unit labor costs (f) (2.0%, 2.3%) 0830ET

- Mar 07 Jan trade balance (-$53.1B, -$55.1B) 0830ET

- Mar 07 Mar help-wanted online ratio (1.34, --) 1000ET

- Mar 07 02-Mar crude oil stocks ex. SPR w/w (3.02m bbl, --) 1030ET

- Mar 07 Federal Reserve Beige Book for upcoming FOMC, DC 1400ET 

- Mar 07 Jan consumer credit ($18.4B, $16.9B) 1500ET

- Mar 07 Feb Treasury Allotments (final) 1500ET

- Mar 08 Feb challenger layoff plans (-2.8%, --) 0730ET

- Mar 08 03-Mar jobless claims (210k, 218k) 0830ET

- Mar 08 04-Mar Bloomberg comfort index 0945ET

- Mar 08 Q4 Service Revenue (+2.4%, --) 1000ET

- Mar 08 Q3 QCEW employment (+2.407m, --) 1000ET

- Mar 08 02-Mar natural gas stocks w/w 1030ET

- Mar 08 Q4 domestic non-financial debt 1200ET

- Mar 08 07-Mar Fed weekly securities holdings 1630ET

- Mar 09 Feb nonfarm payrolls (200k, 210k) 0830ET

- Mar 09 Feb private payrolls (196k, 195k) 0830ET

- Mar 09 Feb unemployment rate (4.1%, 4.1%) 0830ET

- Mar 09 Feb average hourly earnings (0.3%, 0.2%) 0830ET

- Mar 09 Feb average workweek, all workers (34.3hrs, 34.4) 0830ET

- Mar 09 Jan wholesale inventories (0.4%, --) 1000ET

- Mar 09 Jan wholesale sales (1.2%, --) 1000ET

- Mar 09 Q1 St. Louis Fed Real GDP Nowcast (3.45%, --) 1100ET

- Mar 09 Q1 NY Fed GDP Nowcast (3.0%, --) 1115ET

- Mar 09 Chicago Fed Pres Evans, Manhattan Institute Shadow Open Market Comm, NY

with audience Q&A. 1245ET

--MNI Chicago Bureau; tel: +1 312-431-0089; email: bill.sokolis@marketnews.com

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

[TOPICS: MTABLE,M$U$$$,M$$FI$,MN$FI$,MN$FX$]