Rise and shine everyone. It’s Jobs Friday.

Today’s focus will be the US Employment Report at 8:30 am ET. (more below)

Nothing seems to faze this market, with Indices reaching yet another all-time high yesterday. US Futures are trading marginally higher this morning. Yields, the US Dollar, and Crude Oil are slightly low. Bitcoin is higher and Gold keeps making new highs as well.

Yesterday’s ECB announcement also sent European markets higher - as we expected, inflation and growth numbers were revised lower and hints for a June rate cut were confirmed.

Meanwhile, an overnight update from the BoJ’s Governor Ueda: Can exit appropriately when time comes; Will mull adjusting easing if we can achieve price target; Chance of reaching target getting higher little by little. - Overnight BOJ futures priced the chances of a hike at the March 18-19th policy meeting at more than 70%. This was the case ahead of the January meeting as well, so it doesn’t necessarily signify an imminent change. Analysis from Bloomberg shows the decision is still split.

Big Stories

US Employment Report

Last month, we got quite the surprise as the Nonfarm Payroll additions came in much higher than expected at 353k vs. the consensus of 180k. The unemployment rate ticked down to 3.7% from 3.8%. Part of the strength was attributed to the January seasonal adjustment that anticipated job cuts. The previous report December was also revised higher to 333k from 216k.

This time around however, the consensus estimate has been revised lower because recent employment data has been coming in weaker and analysts don’t foresee the same January adjustments:

The view now is: If the payroll number comes in stronger than expected, the economy remains strong and the Fed has reason to delay rate cuts. That will likely put pressure on the market.

US State of the Union has implications

Everyone’s talking about President Biden’s State of the Union address yesterday. While he called for peace in Ukraine and Gaza, requesting approval for aid, there are other proposals that directly affect fiscal spending and the economy.

President Biden's State of the Union address outlines key policy proposals:

• Proposes making the health care tax credit permanent.

• Plans to increase the minimum corporate tax rate to 21% from the current 15%.

• Offers up to two years of $400 monthly tax credits for first-time homebuyers.

• Urges Congress to ensure the right to IVF treatments.

• Seeks to impose a $2,000 annual cap on drug costs per individual.

• Urges the passing of a bipartisan Senate bill on border security.

• Calls for legislation to combat 'shrinkflation'.

• Requests former President Trump's support for the bipartisan border bill.

• Advocates for the ban on AI voice impersonation technologies.

• Proposes an annual tax credit to assist Americans with $400 monthly towards mortgages as rates decrease, applicable to first-time buyers or those seeking more space.

• Aims to remove title insurance fees for federally backed mortgages and is rumored to propose a $5,000 credit for first-time homebuyers.

Chart of the Day

BofA’s weekly spending report shows an overall 1% drop in spending YoY. Transit spending increased 10% YoY as of 02 March, while the biggest declines were seen in Furniture, Lodging, Airlines and Online Electronics.

Other Stories

• Overnight BOJ futures priced the chances of a hike at the March 18-19th policy meeting at more than 70%

• China overall passenger vehicles and NEV sales both plummet -42% m/m

• Feb Challenger Job Cuts: 84.6K v 82.3K prior (highest since May 2023); Y/Y: +8.8% v -20.0% prior; Notes persistent wave of layoffs.

• Fed chief Powell semi-annual testimony: Well aware of risks of cutting rates too late.

• ECB's Nagel (hawk, Germany): ECB could cut rates before the summer break; move would be data-dependent.

• Peru Central Bank (BCRP) left its Reference Rate unchanged at 6.25% (not expected) for its 1st pause in 7 decisions under the in the current easing cycle.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)

No earnings of note.