US indices are being weighed down by today's tepid June jobs report as trading volumes remain very subdued ahead of the Fourth of July holiday. Treasury's are bid as the UST 10-year yield comes in five basis points to trade 2.37%. As of writing, the DJIA is down 0.12%, the S&P500 is flat and the Nasdaq is down 0.28%.
The Labor Department's June employment report marked the 57th consecutive month of US job growth, however there were sour notes in the data. Total nonfarm payrolls expanded by slightly less than expected (+223K v +233Ke) and the labor force participation rate declined to 62.6%, its lowest level since October 1977, after touching a four-month high of 62.9% in May. After a tick higher to 5.5% in May, the unemployment rate dropped to 5.3% in June, reflecting the lower participation rate. The April and May nonfarm payrolls were revised lower by 60K jobs. Responding to the data, Goldman Sachs Chief Economist Jan Hatzius said despite the downsides in the report he still expects to see the first Fed rate hike in December.
Greece is in total stasis as all of Europe awaits the bailout referendum scheduled for Sunday, June 5th. The banks are closed and capital controls are in place. Greek Finance Minister Varoufakis joined PM Tsipras in promising to resign if the Greek public voted yes to accept the creditors' bailout terms. There were reports that the ECB had scheduled a meeting to discuss ELA funding for Greece for the Monday after the referendum, while Varoufakis promised the banks would open on Tuesday as normal, calling the banking sector "perfectly capitalized." After testing below 1.1040 yesterday afternoon, EUR/USD is back around 1.1110 this morning.
Shares of Tesla have been volatile this morning. TSLA gained 4.5% in the premarket after the firm reported total Q2 Model S deliveries of 11.5K units, above the prior guidance range of 10-11K units. Just after the open of cash trading, Citron Research reiterated its cautious stance on the name, saying it may be time to get short Tesla again, calling the delivery numbers disappointing. TSLA is around +1.8% as of writing.
Yesterday afternoon, major US airlines disclosed that federal prosecutors had begun an investigation into possible collusion among the companies to limit seating. This comes just two years after the DoJ approved the latest in a wave of industry mergers that has concentrated 80% of US traffic among four airlines: American, United, Delta and Southwest. Prosecutors have asked for documents from the last two years related to statements and decisions they have made about limiting capacity on flight routes. Airline shares have regained ground this morning after seeing sharp spikes lower yesterday.
Federal officials and the states of Florida, Alabama, Mississippi and Louisiana have reached an $18.7 billion settlement with BP to resolve all outstanding litigation over the 2010 Gulf of Mexico oil spill. The settlement resolves natural resources damages and Clean Water Act infringements, however civil cases brought against BP by businesses and individuals remain outstanding. ADRs of BP are up 5% on the session.
***Looking Ahead***
- 13:00 (US) Weekly Baker Hughes Rig Count
- 17:00 (KR) South Korea Jun Foreign Reserves: No est v $371.5B prior
- 21:30 (AU) Australia May Retail Sales M/M: 0.5%e v 0.0% prior
- 21:35 (JP) Japan Jun Services PMI: No est v 51.5 prior; PMI Composite: No est v 51.6 prior
- 21:45 (CN) China Markit PMI Services: No est v 53.5 prior PMI Composite: No est v 51.2 prior
***Economic data***
- (ZA) South Africa May Electricity Consumption Y/Y: -2.7% v -2.2% prior; Electricity Production Y/Y: -3.5% v -4.5% prior
- (BR) Brazil May Industrial Production MM: +0.6% v -0.4%e; Y/Y: -8.8% v -10.0%e
- (US) Jun Change in Nonfarm Payrolls: +223K v +233Ke; Change in Private Payrolls: +223K v +225Ke v; Change in Manufacturing Payrolls: +4K v +6Ke
- (US) Jun Unemployment Rate: 5.3% v 5.4%e; Underemployment Rate: 10.5% v 10.7%e; Change in Household Employment: -56K v +272K prior; Labor Force Participation Rate: 62.6% v 62.9%e
- (US) Jun Average Hourly Earnings M/M: 0.0% v 0.2%e; Y/Y: 2.0% v 2.3%e; Average Weekly Hours: 34.5 v 34.5e
- (US) Initial Jobless Claims: 281K v 270Ke; Continuing Claims: 2.264M v 2.24Me
- (MX) Mexico May Leading Indicators M/M: -0.05 v -0.06 prior
- (SG) Singapore Jun Purchasing Managers Index: 50.4 v 50.2e; Electronics Sector Index: 50.3 v 49.8 prior
- (CA) Canada Jun RBC Manufacturing PMI: 51.3 v 49.8 prior
- (US) Jun ISM New York: 63.1 v 54.0 prior
- (US) May Factory Orders: -1.0% v -0.5%e; Factory Orders Ex Transportation: 0.1% v 0.0% prior
- (US) Weekly EIA Natural Gas Inventories: +69 bcf v +69 to +73 bcf expected
[I]Contributed by Trade The News[/I]
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