From Christmas in October to Storm Damage, What to Watch for in U.S. Jobs Report
The government's October jobs report is poised to offer the last big data point on a steady if unimpressive U.S. economy, four days before Americans flock to the polls.
Payrolls probably rose 175,000 last month for the first acceleration since June, according to economists' projections ahead of Friday's 8:30 a.m. release from the Labor Department in Washington. While many voters — including the more than 32 million who have cast ballots early — already have made up their minds, both presidential campaigns are likely to use the data to affirm closing arguments on the economy.
The report may also solidify the case for the Federal Reserve to raise interest rates in December for the first time in a year, following the central bank's statement Wednesday that officials would wait for "some further evidence of continued progress" in the economy amid "solid" job gains. The figures should confirm the "trend of broad-based job gains consistent with an ever-improving and healing labor market" and keep the Fed on course, said Emanuella Enenajor, an economist at Bank of America Corp. in New York.
Traders are becoming more certain the U.S. central bank will raise borrowing costs next month, with the odds of a move rising to 78 percent from 69 percent at the end of last week, according to Fed fund futures. After a five-day losing run, the Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, has steadied.
Hurricane Matthew's East Coast assault was just fading at the start of the calendar week during which government officials survey households and businesses to compile the jobs data. That has economists like Ryan Sweet of Moody’s Analytics Inc. on guard for the weather's impact on various gauges in Friday's report.
"Forecasting monthly employment is always a humbling experience, but this October is going to be trickier than usual because there are several temporary factors at play," said Sweet, who's based in in West Chester, Pennsylvania.
The storm might actually help, rather than hurt, the headline jobs figure, since the messy part of the storm occurred before the survey week and cleanup efforts tend to boost payrolls, Sweet said.
Brexit Flashbacks Haunt Traders Bracing for Clinton-Trump Vote
Less than five months after the U.K.’s surprise Brexit vote shook up global markets, traders are scouting the best locations to once again assume the fetal position.
The Nov. 8 presidential election between Hillary Clinton and Donald Trump has trading firms preparing for potential upheaval -- financial, political and personal. They’re boosting staffing, carrying out stress tests and hedging bets in the event of Brexit-style turbulence on Tuesday.
“I’m getting night sweats and flashbacks of Brexit,” said Brian Frank, portfolio manager at Key Biscayne, Florida-based Frank Capital Partners LLC. “I’ve got my bomb shelter ready with battle helmets and water supply.”
All the talk about curling up and hoarding supplies is only a little facetious. From currencies to bonds to equities, volatility is surging. The measure of stock-market fluctuations, known as the VIX, has risen for eight days, matching the longest streak on record, while currency and U.S. Treasury volatility were near three-month and seven-week highs, respectively. With polls showing a close race, investors are taking no chances. They’re gearing up for rocky trading.
In the $5.1-trillion-a-day currency market, the importance of preparing for the unexpected was made plain four weeks ago when the pound crashed 6 percent in a matter of minutes during early Asia trading hours. The plunge in the world’s fourth-most-traded currency followed at least three other bouts of puzzling foreign-exchange turbulence in the past two years, including in South Africa’s rand and New Zealand’s dollar.
ICAP Plc plans to double staffing on the customer-support desk for its electronic currency trading platform on election night, according to Darryl Hooker, co-head of ICAP’s EBS BrokerTec Markets unit. The company carries out regular checks of its systems’ capacity, and Hooker said he expects regulators and central bankers will ask for a review of market operations after the election, as they typically do after big events.
Fastmatch Inc., a New York-based foreign-exchange-trading venue, said its key staff will toil on election night and hotel rooms will be ready in case personnel are needed back at work early Wednesday. Anticipating greater volatility, the company has widened trading bands on its system to allow for a bigger range of bids or offers around a midpoint price.
Retail brokers FXCM Inc., London Capital Group and Saxo Bank A/S are temporarily increasing margin requirements on major currency pairs, asking customers to set aside bigger deposits in order to trade in markets that are likely to be more volatile.
Traders are also monitoring and adjusting positions. Sinead Colton, San Francisco-based head of investment strategy at Mellon Capital Management Corp., has stress-tested her portfolios and is using options to hedge against abnormally large price moves.
Oil set for sixth straight day of declines
Oil prices were on course for their sixth straight day of falls on Friday, dragged lower by a surge in U.S. crude inventories, timid demand and doubts over the ability of producers to coordinate output cuts.
Brent crude futures LCOc1 were at $46.21 per barrel at 0740 GMT (3:40 a.m. ET) , down 14 cents from their last close. U.S. West Texas Intermediate (WTI) futures were down 9 cents at $44.57 a barrel.
Reference: Bloomberg