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FRIDAY, MARCH 8, 2019



TOP NEWS

U.S. employment growth almost stalled in February, with the economy creating only 20,000 jobs, adding to signs of a sharp slowdown in economic activity in the first quarter. The unemployment rate fell back to below 4 percent. Job gains over the last two months averaged 186,000 per month. The unemployment rate fell to 3.8 percent in February. The annual wage growth was the best since 2009 and the economy created 12,000 more jobs in December and January than previously reported, bringing the total for the two months to 538,000. In another report, the Commerce Department said that housing starts jumped 18.6 percent to a seasonally adjusted annual rate of 1.230 million units in January. Building permits rose 1.4 percent to a rate of 1.345 million units in January.

Trump administration officials have not made any new plans to send a team to China for face-to-face trade talks although there is much work left to be done to reach a deal, White House trade adviser Clete Willems said. "We're talking to them (Chinese officials) every day, but no one's got any trip plans," Willems told reporters on the sidelines of a Georgetown Law School event. When asked about the prospect for future face-to-face meetings, he said: "Maybe. But there are no plans right now." Willems said the two countries had made progress in talks but that there was still much more to be done. He declined to say whether Trump would set a new tariff deadline should the talks stall.
 
China's exports tumbled the most in three years in February while imports fell for a third straight month, pointing to a further slowdown in the economy and stirring talk of a "trade recession", despite a spate of support measures. Exports fell 20.7 percent from a year earlier, the largest decline since February 2016, customs data showed. Imports fell 5.2 percent from a year earlier, worse than analysts' forecasts for a 1.4 percent fall and widening from January's 1.5 percent drop. That left the country with a trade surplus of $4.12 billion for the month, much smaller than forecasts of $26.38 billion. Surplus with the United States narrowed to $14.72 billion in February from $27.3 billion in January. 

Dovish ECB fails to lift inflation views, rate-hike bets pushed out
Investors have pushed back expectations for a rise in euro zone interest rates to late-2020 from mid-2020, in a sign that the ECB will have to keep rates lower for longer than even the bank now anticipates. There was also skepticism that the ECB would be able revive inflation towards its near two-percent target long-term. The ECB on Thursday pushed out the timing of its first post-crisis rate hike until 2020 at the earliest. Investors globally have reassessed expectations for central bank tightening because of weak economic data and concern about risks from trade wars and Brexit.

German industrial orders post strongest drop in 7 months
German industrial orders posted their biggest drop in seven months in January, a further sign that Europe's largest economy had a subdued start to 2019, although December's figure was revised to show a rise rather than the previously reported fall. Contracts for goods 'Made in Germany' were down by 2.6 percent on the month, Economy Ministry data showed. The figure for December was revised to an increase of 0.9 percent rather than the drop of 1.6 percent announced a month ago. Separate data from the VDMA engineering association published on Friday showed contracts in that sector declining by 9 percent on the year in January as bookings from the euro zone tumbled by 22 percent. Separately, France‚Äôs industrial production rose 1.3 percent in January after flat-lining in December, the country's NSEE stats official agency said.


DEEP DIVE

Headline U.S. job growth hit the brakes in February, registering the smallest gain since September 2017 and the third-smallest during the unprecedented run of 101 consecutive months of payrolls gains.

GRAPHIC-Take Five: 'Pervasive uncertainty' - World markets themes for the week ahead
Five big themes likely to dominate the thinking of investors and traders in the coming week and the Reuters stories related to them.

PREVIEW-BOJ to offer bleaker view on overseas economies, keep policy steady
The Bank of Japan will likely maintain its view the export-reliant economy is expanding moderately but warn of heightening overseas risks at next week's rate review, sources say, as China's slowdown and trade tension cloud the outlook.

European borrowers are starting to raise more debt governed by their own laws rather than the English legal system, creating uncertainty for investors over how bond defaults and bank restructurings will be treated post-Brexit.


CHART OF THE DAY


MARKETS TODAY


TREASURIES: Treasury yields fell after U.S. job growth dropped unexpectedly in February, with the economy creating only 20,000 jobs, a 93 percent decline from the prior month, amid a contraction of payrolls in construction, among other sectors. Benchmark 10-year notes were up 3/32 to yield 2.63 pct. Two-year notes were unchanged, yielding 2.47 pct. 30-year bonds gained 10/32 to yield 3.01 pct.

FOREX: The dollar fell against most major currencies as data showed U.S. employers hired far fewer workers than forecast in February, while the euro rebounded from a 20-month low tied to the European Central Bank's dovish shift the day before. The dollar index was down 0.31 pct at 97.363. The euro gained 0.36 pct at $1.1232, rebounding from a 20-month low of $1.11765 reached on Thursday. Against the yen, the dollar fell 0.42 pct to 111.11 yen. Sterling was down 0.52 pct at $1.3016.

CORPORATES: Corporate bond spreads were unchanged after a disappointing U.S. payrolls report fanned concerns that the world economy was slowing. The CDX-IG.31 index was unchanged at 64 bps.

STOCKS: Wall Street's main stock indexes fell for a fifth straight session and posted their biggest weekly declines since the market tumbled at the end of 2018, as a weak U.S. jobs report ignited more concerns about the global economy. Exxon Mobil dropped 1.41 pct. Costco Wholesale rose 5.09 pct. Amazon, Alphabet and Facebook were down 0.32 pct, 0.24 pct and 0.28 pct respectively, after Senator Elizabeth Warren vowed to break up the three companies if elected U.S. president to promote competition in the tech sector. The Dow fell 23.12 points, or 0.09 pct, to 25,450.11, the S&P 500 lost 5.89 points, or 0.21 pct, to 2,743.04 and the Nasdaq dropped 13.32 points, or 0.18 pct, to 7,408.14. For the week, Dow was down 2.2 pct, S&P 500 fell 2.2 pct and Nasdaq dropped 2.5 pct.

C&E: Oil fell after disappointing U.S. job growth revived concerns about a slowing global economy and weaker demand for oil. U.S. crude was down 0.94 pct at $56.13 a barrel. Brent lost 0.75 pct at 65.8 a barrel. Gold was up 1.11 pct at $1299.76 an ounce.


NEX DATA



LATAM NEWS


Argentina sharply hikes rates to stem peso slide
Argentina sharply hiked its key benchmark interest rate, helping revive the country's peso currency after it had hit a record low against the U.S. dollar the previous day. The peso strengthened after the central bank offered short-term "Leliq" notes at over 59 percent, the highest rate since early January, in a bid to lure traders back to the currency after economic concerns sparked a flight on Thursday. Analysts see the peso weakening further to around 48 per dollar by the end of the year, with uncertainties about the elections likely to drag it down.

IMF raises Colombia growth prediction to 3.5 pct for this year
The IMF raised its 2019 economic growth prediction for Colombia to 3.5 percent and said the country's recovery is gaining momentum despite slowing global expansion.The estimate for this year's expansion is up from a previous figure of 3.3 percent. The body predicts growth in 2020 will be 3.6 percent. The government estimates growth will reach 3.6 percent this year.

LATAM MARKETS



EYE ON ASIA

India inflation likely picked up in Feb, but well below RBI target
Indian inflation likely accelerated in February but remained well below the central bank's target, economists in a Reuters poll said, as only modest rises in food and fuel prices failed to drive a bigger lift from January's 19-month low. The poll showed consumer price inflation is expected to have picked up to 2.43 percent last month from January's 2.05 percent. If inflation comes in as expected, it would be below the Reserve Bank of India's medium-term target of 4 percent for the seventh month in a row and closer to the lower end of its 2-6 percent buffer range for a fourth month.

Philippines c.bank gov sees opportunity to ease monetary policy
The newly-appointed Philippine central bank chief said there is room to ease monetary policy given a cooling in inflation, but he was quick to clarify that the timing of any such action would be data-dependent. Bangko Sentral ng Pilipinas Governor Benjamin Diokno also said in a press briefing that there is an opportunity to further reduce the reserve requirement ratio, which he said is still too high. The annual inflation rate moved back inside the bank's 2-4 percent target in February when it eased to a one-year low of 3.8 percent, but year-to-date inflation of 4.1 percent is still outside that range.


ASIA ECON WATCH (For March 9)
China PPI YY for Feb: Expected 0.2 pct; Prior 0.1 pct
China CPI YY for Feb: Expected 1.5 pct; Prior 1.7 pct
China CPI MM for Feb: Expected 0.7 pct; Prior 0.5 pct
THOMSON REUTERS   thomsonreuters.com

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