Equity futures are firmly higher this morning ahead of February employment numbers. Payrolls are expected to continue declining but investors are reacting positively to news that the Bank of Japan could initiate measures to protect the economy from deflation.
Overseas markets have been positive across the board, including a 2.20% gain in Japan, a 1.03% gain in Hong Kong, and gains of around 1% in Europe.
“The Nikkei posted its strongest week of the year as the yen weakened amid speculation that the BoJ will undertake further easing,” noted analysts from BMO. “Meantime, a successful 10-year bond sale by Greece (which raised €5 bln), and stronger-than-expected factory data, are giving Europe a lift, though the euro is little changed.”
Two hours before the opening bell, Dow futures are up 35 points to 10,466 while S&P 500 futures are off 5.10 points to 1,127.40.
Commodities remain mixed. WTI crude oil is up 46 cents to $80.67 per barrel but Spot Gold is down $9.60 per ounce to $1,133.70.
Key Events Today:
8:30 ― The Employment Situation remains dire and few economists are predicting any improvement in February. The consensus among economists is to see 68k jobs lost compared with a 20k decline in January. The worsening is a reflection of cold weather, while on the upside there should be some temporary hiring for the 2010 Census. READ MORE
Economists at Nomura estimate the underlying trend in private employment growth to be about -20,000, adding that a firm read is tough because of volatile jobless claims.
“The severe winter storm that battered the Northeast during the period in which the employment figures were calculated may depress job growth,” they added. “Based on the performance of payrolls around other storms ― in particular the Northeast blizzard in January 1996 ― we assume that weather-related factors will subtract 50,000 from employment growth.”
Analysts at BBVA added: “While job losses have slowed significantly from 2009’s average of 398K, they will continue in February. The transition to net job creation will be slow because businesses are currently increasing productivity of existing employees in order to meet new demand. The labor market could remain one of the main challenges to recovery in 2010.”
The unemployment rate, which fell from 10.0% to 9.7% last month, is expected to rise to 9.8%.
3:00 ― Consumer Credit has been falling steadily since mid-2008. In December credit fell by $1.8 billion, a tiny amount compared to the record $21.8 billion drop in November. In January the consensus looks for a $4.0 billion drop, with estimates ranging from $3.0 billion to $10.0 billion.
“Consumer credit outstanding is expected to shrink for the eighteenth consecutive month as consumers continue to whittle down their debt and lenders maintain tighter credit standards than before the crisis,” wrote economists at BBVA. “Non-revolving credit has begun to stabilize, but the ongoing decline in revolving credit indicates that households are limiting the use of credit cards. Household deleveraging could be one of the primary drivers behind the slow recovery of PCE in 2010.”
