Three Things To Watch Today: Bond Auctions, PPI, Jobless Claims

While we await tomorrow’s mammoth US Employment report, there are three things to look out for Thursday, namely the French and Spanish bond auctions, the Eurozone PPI and Initial Jobless Claims.

France (10:00 GMT) and Spain (09:30) to tap into the credit market: Both Spain and France will attempt to carry out auctions today. It’s 3-, 4-, and 5-year bonds in the case of Spain while France issues debt at maturities 6-, 8- and 10-year. Yesterday’s reasonably good Portuguese auctions added to risk sentiment, but as we cautioned the maturities were not long enough to really give us insight into demand for Portuguese debt. Let us see today if demand for Spanish and French debt is alive and well.

Eurozone PPI (10:00) to decelerate: Surely, ECB president Mario Draghi would love to cut the main refinancing rate at the central bank even further, having presided over two cuts already (to 100bps from 150bps) since taking over from Trichet last year, but in his way stands inflation. Luckily for Draghi the rate of price increases is expected to slow in today’s PPI report to 4.3 percent year-on-year in December from 5.3 percent even if yesterday’s flash estimate saw unchanged CPI in January at 2.7 percent. As the Eurozone works its way through its current malaise we look for a further decelerating in inflation (and even project a rate cut this quarter, see our Quarterly Outlook 1Q).

Initial Jobless Claims (13:30) to continue downtrend? The solid trend downwards in claims on first-time insurance benefits has prevail so far this year despite an ugly bounce to 402,000 a couple of weeks ago. As the most timely of the coincident labour market indicator keep an eye out for this number, which at consensus’ forecast of 371,000 points to healthy, if not impressive – also confirmed in yesterday’s ADP report. Looking ahead, the consensus forecast for tomorrow’s Nonfarm Payrolls figure is currently 145,000 down from 200,000 in December. Watch this space for our preview of Nonfarm Payrolls.

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