World Week Ahead Eyes on US jobs, Yellen

Monday 31st March 2014

A slew of US economic reports due in the coming days might help bolster sentiment especially if March's jobs data show the country has weathered a frigid winter better than anticipated.

Investors will closely watch the ADP employment report on Wednesday, followed by weekly jobless claims on Thursday, and the government's monthly employment report on Friday.

US employers probably added more workers to payrolls in March than the 175,000 a month earlier, while the unemployment rate may have declined to 6.6 percent, matching the lowest level since October 2008, according to a Bloomberg survey.

Other reports will also be eyed for signs that the recovery in the world's largest economy is on track. Those include Chicago PMI and Dallas Fed manufacturing survey, due today; PMI and ISM manufacturing indices, and construction spending, due Tuesday; factory orders, due Wednesday; international trade, PMI services index, and ISM non-manufacturing index, due Thursday.

Yields on US Treasuries have climbed in the wake of comments by Federal Reserve Chairman Janet Yellen that US rates might rise as early as in the first half of 2015, earlier than investors had anticipated. Yellen will speak at a conference in Chicago today, while on Wednesday Atlanta Fed President Dennis Lockhart will talk about the economic outlook, in Miami.

"The fear of higher rates in the near term played havoc on the front end of the curve, and the market wasn't ready for that," Sean Simko, a money manager who oversees US$10 billion at SEI Investments in Oaks, Pennsylvania, told Bloomberg News.

Last week, the Standard & Poor's 500 index fell 0.5 percent and the Nasdaq Composite index dropped 2.8 percent as investors sold shares of internet and biotech companies to lock in profits. The Nasdaq Biotechnology Index sank 7 percent last week. The Dow Jones Industrial Average rose 0.1 percent.

So far in 2014, the Dow is down 1 percent, while the Nasdaq has slid 0.2 percent. The S&P has gained 1 percent.

Europe's Stoxx 600 added 1.8 percent last week, as did France's CAC 40. The UK's FTSE 100 gained 0.9 percent, while Germany's DAX climbed 2.6 percent.

Policy makers of the European Central Bank meet this week and are expected to keep the benchmark interest rate at a record low on Thursday.

On Friday, a report showed that economic confidence in the euro zone rose more than expected in March, helping to bolster optimism about the outlook and the sentiment for equities.

Data to watch here in the coming days include the euro-zone consumer price index, due today; euro-zone unemployment and manufacturing, due Tuesday; euro-zone retail sales, due Thursday; and German factory orders, due Friday.

Among the latest clues for China's economy is the official March manufacturing purchasing managers' index, which will be released on Tuesday. There's also rising expectation that the Chinese government will detail measures to further contain the slowdown in the world's second-biggest economy, perhaps cutting interest rates.

On Wednesday, International Monetary Fund Managing Director Christine Lagarde will discuss the state of the global economy at Johns Hopkins University in Washington ahead of the 2014 IMF/World Bank spring meetings.

BusinessDesk.co.nz

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