US Futures Rebound After Volatile Session, All Eyes On June Payrolls
By Tyler Durden
In a session where bleary-eyed traders followed the all-night tragic developments out of Dallas and initially sold off risk assets, it is good to see that some normalcy prevailed with the traditional post Europe-open futures ramp, which was further assisted by the successful resolution of the Dallas standoff, which has pushed futures modestly higher ahead of today’s main event for markets, the June payrolls report due in under two hours.
“European markets have done well to open on the green,” said Michael Ingram, a strategist at BGC Partners in London. “Still, feeble volumes belie a real lack of conviction ahead of the U.S. non-farms. I am not sure the NFPs will help to put the market on a more stable footing, as a solid number will put a Fed hike back on the agenda. Ideally, equity markets would like to see evidence of robust growth and somnolent central banks.”
As discussed last night, the payrolls report – especially if a significant outlier to the consensus print of +180,000 – could sway expectations for the timing of the Fed’s next interest-rate hike. Officials at the central bank flagged concern over job creation at their last meeting, which followed data showing employers in May took on the fewest workers since 2010, casting doubts on prospects for a rate increase this year.
The Stoxx Europe 600 Index rose 0.2% in early trading, rebounding for the 2nd straight day, after dropping 2.9% this week. Europe saw some further relief when Italy’s Banco Popolare rallied 7% after saying its own stress tests showed “resilience” to adverse shocks. Banca Popolare dell’Emilia Romagna SC climbed 5%, and Monte Paschi added 3% after reaching a record low despite a 3-month long short selling ban imposed by the Italian regulator. The lender’s chief executive officer said it’s working “intensely” with authorities to quickly resolve its bad-loan burden. European automakers climbed as China’s car sales grew faster in the first half of the year.
S&P 500 futures added 0.2% after being modestly lower overnight. In the U.S., Juno Therapeutics Inc. sank 27 percent in early New York trading after saying that three patients died during its clinical trial for a cancer therapy and that the U.S. Food and Drug Administration has placed the study on hold.
Treasuries headed for a seventh weekly gain as the U.K.’s vote to leave the EU threatens to slow economic growth and drives investors to the relative safety of bonds. Gains in U.S. jobs and wages won’t be enough to get the Fed to move anytime soon as policy makers assess what’s happening in the global economy, PIMCO’s Mark Kiesel told Bloomberg. German bunds also headed for a seventh weekly gain, the longest run since January 2015. Italian bonds gained on Friday, with the yield on the securities falling two basis points to 1.22 percent.
As noted, the only notable macro event on today’s calendar will be the June jobs report, where consensus expects an increase of 180,000 workers following last month’s appalling 38,000 print.
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