Interest rates are slightly higher and equity markets are edging out gains this morning ahead of January’s nonfarm employment report, which is anticipated to show the creation of 145k new jobs.
Seventy minutes before the opening bell, S&P 500 futures are 2.25 points higher at 1,305.50 and Dow futures are 25 points higher at 12,034. The benchmark 10 year TSY note is -5/32 at 92-09 yielding 3.566%. The 2s/10s curve is 1bps steeper at 284bps wide. The FNCL 4.5 is -4/32 at 101-06.
Both indexes spent Thursday morning in the red but recovered in the afternoon as Fed chairman Ben Bernanke predicted “stronger employment reports and lower unemployment rates pretty soon.” He also said to look for “a more rapid pace of economic recovery in 2011 than we saw last year.”
The benchmark S&P 500 has gained 3.93% year-to-date, and since Aug. 30 it has climbed a staggering 22.8%.
Commodity prices are mixed. Light crude oil is trading 0.72% higher at $91.26 per barrel, while gold prices are 0.36% lower at $1,348.35 per ounce.
Key Events Today:
8:30 ― Expectations are pretty humble for the January Nonfarm Payrolls report. The median forecast is for 145k new jobs, beating the disappointing 103k and 71k figures for December and November, but well below the 210k jobs created in October. The gain isn’t even big enough to reduce the Unemployment Rate, which is seen increasing one-tenth to 9.5%. Private-sector jobs are expected to expand by 155k.
“There are presently no compelling inputs suggesting we should be braced for a strong payroll gain,” said economists at RBC Capital Markets. “Claims have been erratic […] job indexes from the various confidence reports ― such as the one found in the RBC Consumer Outlook Index ― advanced modestly in January. This appears like a recipe for a payroll gain that’s fairly close to the recent average.”
Some economists have said cold weather could throw off the payrolls report by 60k to 70k.
“The main wild card this month is the weather, which was severe enough in some southern states to disrupt the registration of unemployment insurance claims, and may have held down the payroll count, too,” said economists at IHS Global Insight. “As for the unemployment rate, the sharp drop in December to 9.4% from 9.8% looks odd, and we expect a retracement to 9.6% this month.”
Reacting the the jobless claims report Thursday (initial claims fell 42k to 415k), analysts at RDQ Economics said they expect “stronger job creation in January than we saw during the last two months of 2010.” However, they said some new jobs were likely “held back somewhat by the storm that hit during the payroll survey week.”
10:15 ― Fed buys an estimated $6-8 billion in Treasuries maturing between 8/15/2013 and 1/31/2015.