Greece and US jobs: offsetting forces on UST rates this week

Genevieve Signoret

Macro Views

Para español favor de desplazarse hacia abajo.

As we publish this blog entry, Greece is in flux. Its government has called for what may be an unconstitutional referendum to be held on the deal being offered by its creditors. But now rumors are coming in that creditors have taken the deal off the table. Stand by—and expect market turbulence till this is sorted out). We continue to expect an agreement to emerge, but not a definitive one. We think that Greece will need a third bailout, one with debt reduction. We also perceive the risk of a Grexit to be rising sharply.

Besides an unfolding of the Greek crisis, the main market event next week is the U.S. labor report. The consensus and we expect unemployment to have ticked back down a notch in June to 5.4% and for payrolls to have risen by more than 200,000. If so, we’ll feel even more secure in our view that the Fed will act in September.

These two main market events, Greece and the US jobs report, should offset each other. Hence we see the yield on a 10-year U.S. Treasury bond ending June and quarter 2 at 2.45%. This is just two basis points down from today’s closing rate of 2.47%. For more details on our rate outlooks, see our fixed income edition of La Carpeta Negra here.

Al publicar esta entrada de blog, Grecia se encuentra en una encrucijada. Su gobierno ha convocado a lo que podría considerarse un referéndum inconstitucional sobre el acuerdo ofrecido por sus acreedores. Pero ahora hay rumores de que esos mismos acreedores han retirado la oferta. Esperen turbulencias en el mercado hasta que esto se resuelva. Seguimos pensando que se alcanzará un acuerdo, pero no uno definitivo. Creemos que Grecia necesitará un tercer rescate, uno con reducción de deuda. También percibimos un creciente riesgo de que Grecia abandone la zona euro.

Además de la evolución de la crisis griega, el principal evento que afectará el mercado la próxima semana será el reporte laboral de EE UU. El consenso general, con el que concordamos, es que el desempleo bajó un punto en junio a 5.4% y que las nóminas aumentaron en más de 200,000. Si fuese así, nos sentiríamos más seguros con nuestra perspectiva de que la Fed tomará medidas en septiembre.

Estos dos eventos principales del mercado, Grecia y el reporte laboral de EE UU, debieran compensarse mutuamente. Por consiguiente, prevemos que el rendimiento de los bonos del Tesoro de EE UU a 10 años que vencen en junio y el segundo trimestre será de 2.45%. Ello es sólo dos puntos base menos que la tasa de cierre actual de 2.47%. Para mayor información sobre nuestras perspectivas de tasas, vean nuestra edición de renta fija de La Carpeta Negra aquí.

Las próximas cuatro semanas

Events in red are those most likely to shake markets.

Monday 29 

  • Japan: Industrial production (flash).
  • UK: Money supply (May), commercial bank lending (May).
  • Germany: Consumer prices (Jun). 
  • Spain: Consumer prices (Jun, flash).

Tuesday 30

  • Korea: Industrial production (May). Consensus:-3.69%
  • Turkey: Foreign trade (May).
  • Euro Area: Greece’s bailout expires, loan to IMF due, consumer prices (Jun), unemployment (May).
  • UK: Real GDP (1Q, 3rd estimate), balance of payments (1Q). Consensus 6.4%
  • Germany: Unemployment (Jun).
  • Italy: Consumer prices (Jun, flash).
  • PS + 1 and Iran: Deadline for nuclear deal between Iran and world powers.
  • USA: Consumer confidence (Jun), S&P Case-Shiller House Prices Index (Apr). Consensus for the house price index: 5.61% y/y.
  • Brazil: Primary budget balance (May).

Wednesday 1 July

  • Japan: Bank of Japan Tankan (2Q). Consensus: 13, last quarter 12.  Markit manufacturing PMI (Jun, final).
  • Russia: Markit manufacturing PMI (Jun). Consensus: 50.3, last month 50.2. 
  • Turkey: Markit PMI (Jun).
  • Euro Area: Markit manufacturing (Jun, final)
  • UK: Markit manufacturing PMI (Jun).
  • Germany: Markit manufacturing PMI (Jun, final). Consensus: 51.9, last 51.9.
  • France: Markit manufacturing PMI (Jun, final). Consensus: 50.5, last 50.5.
  • Italy: Markit manufacturing PMI (Jun).
  • Spain: Markit manufacturing PMI (Jun).
  • USA: ISM manufacturing (Jun), Light vehicles sales (Jun). Consensus: $17.8 Mn, last $17.71.
  • Brazil: Markit manufacturing PMI (Jun), foreign trade (Jun).
  • Mexico: Remittances (May), IMEF manufacturing PMI (Jun), Consensus: 52, last 52.4. IMEF nonmanufacturing PMI (Jun). Consensus: 51.4, last 51.1.

Thursday 2

  • Korea: Current account balance (Jun).
  • USA: Unemployment rate (Jun) and nonfarm payrolls. Consensus: unemployment rate 5.4% (May: 5.5%); nonfarm payrolls 228k (May: 280K). Factory orders (May). Consensus: -0.2% m/m
  • Brazil: Industrial Production (May).

Friday 3

  • Japan: Markit PMI services (Jun).
  • Turkey: Consumer prices (Jun). Consensus: 8% y/y.
  • Euro Area: MFI Interest rates (May), Markit services and composite PMIs (Jun, final), retail sales (May).
  • UK: Markit PMI services (Jun).
  • Germany: Markit services and composite PMIs (Jun, final).
  • France: Markit services and composite PMIs (Jun, final).
  • Italy: Markit services and composite PMIs (Jun, final).
  • Spain: Markit services and composite PMIs (Jun, final).
  • Mexico: Gross fixed investment (Apr). Consensus: 5% y/y. Banxico economic survey, Banamex survey.

Monday 6

  • Japan: Bank of Japan governors meeting.
  • Germany: Manufacturing orders (May)
  • USA: Markit services PMI (Jun, final), ISM nonmanufacturing (Jun).

Tuesday 7

  • Euro Area: Markit services PMI (Jun, flash).
  • Turkey: Central Bank Report.
  • UK: Industrial production (May).
  • Germany: Industrial production (May).
  • France: Foreign trade (May).
  • USA: Foreign trade (May), commercial bank lending (May).
  • Mexico: Consumer confidence (Jun)

Wednesday 8

  • Japan: Commercial bank lending (Jun), current account (May).
  • Korea: Money supply (May).
  • USA: Federal Open Market Committee minutes.
  • Brazil: Consumer prices.

Thursday 9

  • China: Consumer prices (Jun).
  • Japan: Money supply (Jun), private machinery orders (May).
  • Korea: Monetary policy decision.
  • UK: Monetary policy decision: Consensus: 0.5%, last 0.5%. 
  • Germany: Foreign trade (May).
  • USA: Unemployment claims.
  • Mexico: Consumers prices (Jun).

Friday 10

  • Turkey: Current account (May).
  • UK: Foreign trade (May).
  • France: Industrial production (May).
  • Italy: Industrial production (May).
  • USA: Fed Janet Yellen speaks. 
  • Mexico: Industrial production (May).

Monday 13

  • China: Foreign trade (Jun).
  • Japan: Industrial production (May, final).
  • India: Consumer prices (Jun).
  • Mexico: Formal Job creation (Jun).

Tuesday 14

  • Japan: Bank of Japan Monetary Policy Meeting.
  • Euro Area: European Central Bank lending survey (2Q), industrial production (May)
  • Turkey: Central Bank Report.
  • UK: Consumer prices (Jun).
  • Germany: Consumer prices (May), ZEW business survey (Jul).
  • Italy: Consumer prices (May)
  • Spain: Consumer prices (May)
  • USA: Retail sales (Jun).

Wednesday 15

  • China: Industrial production (Jun), retail sales (Jun), GDP (2Q).
  • Japan: Bank of Japan Monetary Policy Meeting and statement, Governor Kuroda’s press conference. 
  • Turkey: Unemployment (Apr).
  • UK: Employment report (Jun).
  • France: Consumer prices (May)
  • USA: Industrial production (Jun), Beige book.

Thursday 16

  • Japan: Bank of Japan monthly economic report.
  • Euro Area: Foreign trade (May), Consumer prices (Jun, final),  monetary policy decision. 
  • France: Foreign trade (May)
  • USA: Unemployment claims.

Friday 17

  • Russia: Retails sales (Jun), Unemployment (Jun), Investment (Jun).
  • USA: Consumer prices (Jun), U. Michigan consumer sentiment and inflation expectations (Jun, final).

Monday 20

  • Euro Area: Current account (May)

Tuesday 21 

  • Japan: Bank of Japan Monetary Policy Meeting minutes.

Wednesday 22

  • UK: Bank of England Monetary Policy Meeting minutes.
  • USA: FHFA house prices (May).
  • Mexico: Retails sales (May).

Thursday 23

  • Korea: GDP (2Q, flash). Consensus: 2.5% y/y.
  • USA: Unemployment claims.
  • Mexico: Banxico Monetary Policy Meeting.

Friday 24

  • China: Markit manufacturing PMI (July, flash).
  • Euro Area: Markit composite, manufacturing and services PMI (July, flash).
  • Germany: Markit manufacturing PMI (July, flash).
  • USA: New home sales (June)
  • Mexico: Economic activity index (Apr), unemployment (Jun).

Update History:

  • 29 June 2015: Added spanish translation. 
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