This week’s major international financial events include: the United States will announce the December non-agricultural employment report, ISM manufacturing index and trade balance data, and the US Federal Reserve (Fed) will also announce the minutes of its December interest rate meeting. In addition to the United States, Markit will announce the final value of the Purchasing Managers Index (PMI) of major economies, including the Eurozone, Germany, France, the United Kingdom and Japan. The market is also concerned about China’s Caixin manufacturing PMI this week.
This week’s trading notes (0102-0107)
1. Non-farm payrolls in the United States in December
The US Department of Labor will release the latest non-farm payroll report on Friday (6th). The market generally expects that about 200,000 new jobs will be created in December. Although it is slower than November, the pace of growth is still steady. The unemployment rate is estimated to remain at 3.7%.
Since September, non-agricultural employment in the United States has mostly grown at a rate of 250,000 to 300,000. Even though news of corporate layoffs has been frequent in recent months, the unemployment rate remains near a historical low of 3.7%.
In terms of wage growth, the market expects average hourly wages to increase by 5% in December, a slight decline from 5.1% in November. Although it is still far above the Fed’s inflation target, market analysis believes that if wage growth in December falls , driving the overall inflation rate to continue to decline, and the expectation that the terminal interest rate will be lower than 5.25% next year is expected to increase.
In addition to non-farm payrolls, important economic data released by the US this week include JOLTs job vacancies, jobless claims, ISM manufacturing/non-manufacturing index, trade balance and construction spending.
2. Fed December meeting minutes
The Federal Reserve will announce the minutes of its December interest rate meeting on Thursday (5th). The Federal Open Market Committee (FOMC) announced a 2-yard rate hike last month, bringing interest rates to a target range of 4.25% to 4.5%. Interest rates will be even higher than originally expected, with the peak of the rate range expected to reach 5.25%.
Judging from recent statements by Fed officials, the real debate is less and less about whether the Fed will raise rates in February, but how much in February. The current market pricing is 1 to 2 yards of interest rate hikes.
3. The final value of PMI by country
This week Markit will announce the final values of the manufacturing and services purchasing managers’ indexes (PMI) for December in major economies, including the euro zone, France, Germany, the UK, the US, China, Japan, Taiwan and India. Markets are closely watching China’s PMI data to gauge the damage to the economy from the escalating outbreak in December.
Under the impact of the epidemic, China announced on Saturday (31st) that the manufacturing economy continued to shrink in December. The official manufacturing PMI fell to 47 for four consecutive months, which was lower than market expectations. The Caixin manufacturing PMI for December will be released on Tuesday (3rd), and the market expects it to drop to 48.8 from 49.4 in the previous month.
4. Economic data such as Eurozone CPI in December
The Eurozone will announce the latest consumer price index (CPI) initial value on Friday (6th), and the market expects that the inflation growth rate in December may fall below 10%, bringing hope to the market that inflation will peak. In terms of regions, the inflation rate in Germany and Italy is expected to decline, and the inflation rate in France is expected to rise slightly.
At a time when the euro zone economy is facing the risk of recession, data such as the German unemployment rate, exports, factory orders, retail sales in the euro zone, and the prosperity index also reveal to investors the health of the euro zone economy. The chief economist of the European Central Bank (ECB) expects There will also be a talk on Friday (6th).