Ahead of weekly labor data and the monthly trade balance equity futures are pointing higher.
Dow futures up 29 points to 10,359 and S&P 500 Futures up 4.25 points to 1,100. Meantime, the US dollar is flat, WTI Crude oil is up 38 cents to $71.05 per barrel, and Spot Gold is trading $4.10 lower to $1,124.50.
European stocks are also trading higher for the first time this week. London’s FTSE 100 France’s CAC 40 are up about 0.65%. Sentiment on both sides of the Atlantic if data at 8:30 is indicative of strong recovery.
Key Events Today:
8:30 ― The Trade Balance is expected to be unchanged from the previous month. In September exports rose a healthy 2.9% but imports simply soared 5.8%, expanding the trade deficit to $36.5 billion from $30.7 billion. October’s balance is expected to be the same, though some economists expect imports to thin out somewhat.
Analysts at BMO give some context: “After hitting a low of $26.4 billion in May, the U.S. trade deficit has been backing up again as imports slowly revive and oil prices climb. Of course, exports have been coming back as well, but they need to grow considerably faster than imports to close the yawning trade gap.”
BMO also notes that the expected numbers are “still well below the average of nearly $60 billion per month in the 2005-08 period.”
Meantime, analysts from IHS Global Insight wrote that “Exports may slip back temporarily after a strong increase in September, mainly on lower aircraft exports. In contrast, we expect imports to move higher to help replenish inventories. Foreign trade has become a drag on growth, since some of the benefit from the recovery in domestic demand is going to foreign producers.”
8:30 ― Initial Jobless Claims have come in below the 500k threshold for two consecutive weeks, pushing the 4-week average to pre-Lehman crash levels last week. For the week ending December 5 economists looks for 460k claims, 3k above the prior week’s 14-month low. Economists say the weekly numbers need to come in below 400k consistently to indicate job growth in the economy, and with only 11k jobs lost in the November nonfarm payrolls report, that can’t be far off.
“Initial jobless claims have declined for five consecutive weeks and fell by more than 40k over the last two weeks,” said economists from Nomura. “These data rarely move in a uniform direction and we expect a partial reversal in the current week. However, the message from recent claims reports is quite clear: lay-offs in the US economy are tapering off.”
12:45 ― Elizabeth Duke, governor of the Federal Reserve, speaks at a conference held by the Chicago Fed on mortgage foreclosure policy.
2:00 ― The new fiscal year began with a bang as the Treasury said the monthly deficit in October as $176.4 billion. November’s Monthly Budget Statement should be less dramatic but the consensus forecast of a $135.0 billion won’t boost anyone’s optimism that a sustainable fiscal path is anywhere around the corner. Estimates from economists polled by Bloomberg range from -$100 billion to -$170 billion, compared to the 10-year November average shortfall of $68.4 billion (2008: -$165.4 billion).
“Although receipts were weaker across most revenue sources, outlays were likely lower than in November 2008 due to the absence of several one-time payments,” said analysys at Nomura. “For example, this year's outlays will exclude the $76bn in TARP-related payments and $14bn equity investment in Freddie Mac that swelled the deficit last year.”
- Treasury Auctions:
- 1:00 ― 30-Year Bonds
