MNI US OPEN - NFP Seasonality, Revisions in Focus

Feb-07 10:40By: Hiren Ravji

EXECUTIVE SUMMARY

MNI US PAYROLLS PREVIEW: REVISIONS AND SEASONALITY IN FOCUS
FED'S LOGAN SAYS RATES COULD BE ON HOLD FOR SOME TIME
IRAN’S KHAMENEI SAYS TRUMP’S PAST MAKES IT UNWISE TO TALK TO US
GERMAN CONSERVATIVES EXTEND LEAD OVER FAR RIGHT IN ELECTION POLL

Figure 1: US NFP seasonality in focus

INVITATION: Livestreamed MNI Connect with ECB Cipollone Feb 18

You are invited to listen to a Livestreamed MNI Connect Video Conference with ECB Executive Board Member, Piero Cipollone. Details below:

TOPIC OF DISCUSSION: The ECB's balance sheet and its implications for monetary policy
DATE: Tuesday 18 February
TIME: 14:00 - 15:30 London time

This event will be run as a Zoom Webinar and is a public, on-the-record event. To register please go to: MNI Webcast Registration

NEWS

MNI US PAYROLLS PREVIEW: Revisions and Seasonality in Focus

January’s employment report will receive almost as much attention for comprehensive revisions as for the monthly nonfarm payroll gains, which are expected to slow to 170-180k from December’s strong 256k. January is typically a difficult month to forecast payrolls (estimates range from 135k-225k), with a pronounced seasonal pattern that includes large post-holiday layoffs. Wildfires in Southern California could act as a small drag this month – we have seen some estimates on the order of circa 20k – although extremely cold weather didn’t fall in the payrolls reference period.

FED (MNI): Fed's Logan Says Rates Could Be On Hold For Some Time

Federal Reserve Bank of Dallas President Lorie Logan said Thursday the central bank might need to keep interest rates on hold for a while if inflation proves stubborn, and how much lower rates can go will be limited by a neutral rate that is likely higher. Logan she sees two main paths for Fed policy this year, which will hinge on whether monetary policy is meaningfully restrictive. If inflation rises, it will be a sign monetary policy has more work to do to restore price stability and keep demand in balance with supply so we can sustain price stability, she said.

US/IRAN (BBG): Iran’s Khamenei Says Trump’s Past Makes It Unwise to Talk to US

Iran’s Supreme Leader Ayatollah Ali Khamenei said talks with the US would be “unwise and dishonorable” after President Donald Trump said he wanted a new nuclear deal with the Islamic Republic. “Negotiating with the US has no impact on resolving the country’s problems,” Khamenei said in a speech shown on Iranian state TV on Friday.

US (WSJ): House Republicans Close In on Budget Deal After Trump Meeting

House Republicans wrapped up a more than four-hour meeting at the White House on Thursday saying that they had closed gaps in their own internal disagreements over extending expiring tax cuts and cutting spending, and indicated details of a deal could be announced as soon as Friday. “We had a very productive meeting,” House Majority Leader Steve Scalise (R., La.) said after lawmakers streamed back into the Capitol. “We are narrowing down the areas of differences.”

US (BBG): Bessent Projects Normalcy While ‘Completely Aligned’ With Musk

In just two weeks as Treasury chief, Scott Bessent has seen plenty of turbulence. The department became a target of Elon Musk’s crackdown on federal spending - triggering protests outside Bessent’s office - and investors are on edge over President Donald Trump’s unpredictable trade policies. Yet in an interview with Bloomberg TV on Thursday, Bessent sought to telegraph a sense of normalcy - and of an administration that’s methodically pursuing its economic goals, including lower taxes and spending, and more balanced trade.

US (WSJ): White House Preparing Order to Cut Thousands of Federal Health Workers

The White House is working on an executive order to fire thousands of U.S. Department of Health and Human Services workers, according to people familiar with the matter. Under the order, the Food and Drug Administration, Centers for Disease Control and Prevention and other health agencies would have to cut a certain percentage of employees.

ECB (MNI): Most Uncertain Outlook Since Pandemic - de Guindos

The uncertainty in the global economy is at its highest point since the Covid-19 pandemic hit in 2020 because of the arrival of the new U.S. administration, European Central Bank vice president Luis de Guindos said at an event in Madrid on Friday. Deregulation in the banking, non-banking and crypto sectors in the U.S. poses financial risks for financial markets, alongside Washington's fiscal policy, noting that markets are increasingly paying attention to the fiscal situation of different countries.

ECB (BBG): ECB’s Lane Cautions Against Focusing Too Much on Neutral Rate

The European Central Bank will scrutinize economic data when deciding how far to lower borrowing costs, and won’t spend too much time thinking about the so-called neutral rate that’s often touted as a guiding star, Chief Economist Philip Lane said. As interest rates approach a level that no longer weighs on economic growth, the debate about this theoretical threshold “loses some relevance,” Lane told Bloomberg’s Odd Lots podcast. He said the concept was more useful when inflation spiked and officials had to signal their determination to bring it back to their goal.

GERMANY (BBG): German Conservatives Extend Lead Over Far Right in Election Poll

Support for Germany’s conservative opposition gained slightly in a new poll, suggesting CDU leader Friedrich Merz’s controversial push for tougher migration rules hasn’t hurt his election prospects. The CDU/CSU alliance gained 1 point to 30% in a Forschungsgruppe Wahlen survey for public broadcaster ZDF published Friday. Conducted Feb. 4-6, it’s among the first major polls to represent voter opinions after Merz’s bungled parliamentary vote last Friday. A separate poll by Infratest dimap also showed that the conservative bloc gain a point.

JAPAN (BBG): Japan’s Ishiba to Tread Cautiously in First Meeting With Trump

Japanese Prime Minister Shigeru Ishiba will likely proceed cautiously in his first meeting with President Donald Trump on Friday as he seeks to avoid economic fallout from tariffs and reaffirm his country’s security alliance with the US. “I’d like to do my best to build a relationship of trust with him,” Ishiba said, just before he departed from Tokyo. “I’d like to confirm cooperation between the US and Japan over economic and security issues, and hope to work together for the development of the Indo-Pacific region, the world, and peace.”

JAPAN (MNI): Japan's Deficit at Risk of Rising - IMF

The International Monetary Fund’s 2025 Article IV Mission has warned Japan that its deficit could widen further and the government should formulate a clear consolidaton plan to ensure debt sustainability and increase fiscal space needed to respond to shocks, such as natural disasters. “This will require elaborating concrete and credible expenditure and revenue measures in the context of a robust medium-term fiscal framework,” the IMF said, noting the political demands of a minority government risked increasing the deficit further.

INDIA (MNI): Bonds, Equities Fall as RBI Cut Repo Rate, Leave Stance Unchanged

The RBI cut rates for the first time in almost five years, voting unanimously to cut by 25bps to 6.25% on the repo rate. Their stance was left at 'neutral', consistent with our view that the rate cutting cycle in India will be shallow. The RBI said it would remain "nimble" on providing liquidity and said it will give banks more time to comply with a new liquidity coverage ratio. However, the lack of new measures on this front as well as the status quo on stance - instead of a change to 'accommodative' - are likely accounting for the weakness across local equities, while yields across the curve are around 2-6bps higher.

DATA

GERMANY DATA (MNI): December Trade Surplus Increases Amid Higher Exports

GERMANY DEC TRADE BALANCE E20.7BLN
GERMANY DEC EXPORTS 2.9% M/M
GERMANY DEC IMPORTS 2.1% M/M

The German trade balance surprisingly increased in December to E20.7bln (seasonally-adjusted, vs E17.0bln cons; E19.7bln prior, revised from E19.2bln). That came as the growth in exports (+2.9% M/M vs -0.5% cons, +2.3% Nov revised from +2.1%) outstripped that of imports (+2.1% M/M vs +1.9% cons, -2.7% Nov revised from -3.3%). On a longer-term view, the German trade surplus appears to be stalling however the surplus fell back to 5.6% GDP on a 12-month rolling basis. For context, it has recovered since October 2022 when it saw a 2.0% low but remains well below its highs of almost 8%.

GERMANY DATA (MNI): 2024 Yearly Comparison Underlines Ongoing Weakness in Production

GERMANY DEC INDUSTRIAL PRODUCTION -2.4% M/M

German industrial production came in weaker than expected in December, at -2.4% M/M, vs consensus of -0.7% and November's print of +1.3% (which was also revised down from +1.5%). On a Y/Y basis, IP came in at -3.1% (vs -2.1% cons; -2.8% Nov). This brings in overall 2024 production at -4.5% vs 2023. Recall that in 2023, discussions about the industrial decline in Germany were dominating - the yearly comparison thus highlights the ongoing decline.

FRANCE DATA (MNI): Flash Private Sector Employment Falls; Broad-Based Weakness

In Q4 2024, the flash estimate for French total private sector salaried employment fell 0.2% Q/Q (vs growth of 0.1% in Q3). On an annual basis employment was flat (0.0%), down from 0.2% Y/Y in Q3, though it is still firmly above levels before the covid pandemic (end of 2019) by 5.6%. The quarterly decline is driven by falls in all sectors except for the non-market services which saw unchanged Q/Q employment. The agricultural private sector saw estimated Q4 employment fall 0.8% Q/Q, after growth of 2.3% in Q3. Though in Q2 it saw a fall of 3.4% Q/Q.

FRANCE DATA (MNI): A Beat for Q4 Wages But Still Implies Y/Y Easing Ahead

France's basic monthly salary (SMB) index was stronger than expected in preliminary Q4 data at 0.4% Q/Q in Q4 (cons 0.3%). It's a second quarter at 0.4% after 0.6% in Q2 and a particularly strong 1.3% in Q1. Y/Y wage growth firmed a tenth on the quarter to 2.8% Y/Y in Q4, sticking recently in the 2.7-2.9% range but with 2H24 trends suggesting some moderation could be seen ahead.

SPAIN DATA (MNI): Strongest Monthly IP Since Nov 2023

Spain December industrial production rose a solid 2.1% Y/Y adjusted for seasonal and calendar effects (vs consensus of 0.7%, and a revised prior of -0.1% from -0.4%). Monthly growth on the same swda basis was strong, at 0.9% M/M (vs 0.3% consensus, -0.7% revised prior from -0.8%) for its strongest since Nov 2023. This leaves the December 3m/3m rate at 0.7%, above the 0.56% in November.

UK DATA (FT): UK House Prices Rise to Record High

The average UK house price rose more than expected in January, hitting a new record high, according to mortgage lender Halifax. House prices rose 0.7 per cent in the month following a dip of -0.2 per cent in December, taking the average property price to £299,138 according to new data on Friday. However, annual growth in prices eased slightly to 3 per cent, down from 3.4 per cent in the previous month. Amanda Bryden, head of mortgages at Halifax, said the UK housing market had “started the year on a positive note”.

NORWAY DATA (MNI): Manufacturing Industrial Momentum Soft Throughout 2024

Norwegian manufacturing industrial momentum remains soft, with 3m/3m SA growth at -0.8% (vs -1.7% in November). The increase in industrial confidence in the Q4 Business Survey and a still-expansionary manufacturing PMI should support a gradual improvement in outcomes through the course of 2025, particularly as Norges Bank start easing policy.

JAPAN DATA (MNI): Dec Household Spending Surges, Matching Stronger Labor Earnings

JAPAN DEC HOUSEHOLD SPENDING +2.7% Y/Y; NOV -0.4%
JAPAN DEC HOUSEHOLD SPENDING +2.3% M/M; NOV +0.4%

Japan's Dec household spending outcome comfortably beat estimates. Real spending rose 2.7% y/y, versus a 0.5% BBG consensus forecast and -0.4% for Nov. Nominal spending was up 7% y/y, matching a solid gain in incomes, which fits with the recent labor earnings data beat from earlier this week. Spending rose 2.3% in real terms m/m.

RATINGS: Negative & Stable Sovereign Outlooks Up for Review After the Close

Sovereign rating reviews of note scheduled for after hours on Friday include:

Fitch on Belgium (current rating: AA-; Outlook Negative) & Finland (current rating: AA+; Outlook Negative)
Moody’s on Luxembourg (current rating: Aaa; Outlook Stable)
S&P on Switzerland (current rating: AAA; Outlook Stable)
Morningstar DBRS on Slovakia (current rating: A, Negative Trend)

Please use this link to access the indicative sovereign rating review schedule covering the five most notable rating agencies for 2025. Note that this schedule is indicative only and ratings can be reviewed on an ad-hoc basis. Rating agencies may also adjust their schedules during the year.

FOREX: USD/JPY Looks to Pause Weekly Decline

JPY slippage stands out early Friday, with USD/JPY managing to pause the week-long decline to bounce off an overnight low of 150.96. Newsflow and data releases are thin early Friday, with price action led by position squaring and consolidation before payrolls. A bearish theme in USDJPY remains intact and this week’s move down reinforces current conditions. The sell-off expands the downside range, however, note that the pair has entered oversold territory.
AUD, NZD trade furtively well, cementing much of this week's rally. AUD/USD looks to secure a close above the 50-dma - a possible S/T signal that the bottom is in at 0.6088 for now, and only a renewed hawkish turn from the Fed or protracted trade war would see prices retest these levels in the immediate short-term.
GBP remains a focus following yesterday's BoE decision and the dovish vote split - but strength for GBP/USD today underscores the belief that while the February vote saw a clear interest for rate cuts, the medium-term trajectory for rates is less one-dimensional, leaving less space for easy policy through into the early part of next year. Gains for the pair this week resulted in a breach of the 20-day EMA and delivered a print above 1.2500, the 50-day EMA, and 1.2523, the Jan 27 high.
The coming payrolls report will naturally be the market focus - but it's not just the headline employment change that should take attention. The comprehensive release of revisions for monthly payroll gains are expected to revise down the sharp pace of gains from 2024 by around 700k, with new population controls for the household survey also set to feature.

EGBS: Tight Ranges Ahead of US Labour Market Report

EGB futures volumes have been subdued, with markets awaiting the US labour market report at 1330GMT/1430CET. Bund futures are +3 ticks at 133.44, towards the top of today’s tight 23 tick range.

A bull cycle in Bund futures remains in play, with the contract consolidating above the 50-day EMA. Next resistance is 133.73, the 50.0% retracement of the Dec 2 - Jan 14 bear leg.
German yields are up to 1.5bps lower on the session.
German industrial production was much weaker than expected at -2.4% M/M (vs -0.7% cons, 1.3% prior), but wasn’t a market mover. Meanwhile, the December trade surplus surprisingly increased to E20.7bln (vs E17.0bln cons; E19.7bln prior).
The ECB’s report on neutral rates is due at 1200GMT/1300CET. The report will likely contextualise President Lagarde’s most recently cited neutral range of 1.75-2.25%. However, several Executive Board speakers (de Guindos, Lane, Cipollone) have played down the importance of neutral in calibrating near-term policy this week.
10-year EGB spreads to Bunds are biased up to 1bp wider, with European equities a little softer today. The BTP/Bund spread was unable to clear YTD lows of ~106.4bps.

GILTS: Looking to Wider Cues, Curve a Little Flatter on the day

Cross-market cues have shaped gilt trade early on Friday, with a recovery from early London lows in core global FI markets pulling UK paper away from lows seen around the open.

Futures -7 at 93.41, range 93.06-93.51.
The short run bullish phase in the contract has extended in recent sessions, with the post-BoE high (94.35) now initial resistance. Initial support at the 20-day EMA (92.43).
Yields little changed to 2bp lower, curve initial post-BoE reaction lows remain untested. Curve flatter on the day.
10-Year gilt/Bund spread little changed at ~210bp.
GBP STIRs have generally tracked broader swings in core global FI markets.
BoE-dated OIS is still pricing ~60bp of cuts through year-end after early nearly fully discounting 75bp of easing shortly after yesterday’s BoE decision was delivered.
SONIA futures are little changed to -4.5.
Domestic focus will fall on comments from BoE chief economist Pill (12:15 London), as he briefs on yesterday’s monetary policy decision. This briefing will likely be dominated by the wider MPC’s views as opposed to his own personal leanings.
Macro inputs of note include the ECB’s latest study on r* and the monthly U.S. NFP release.

BoE Meeting	SONIA BoE-Dated OIS (%)	Difference vs. Cut-Adjusted SONIA Rate (bp)
Mar-25	4.401	-5.4
May-25	4.205	-24.9
Jun-25	4.115	-33.9
Aug-25	3.976	-47.8
Sep-25	3.940	-51.4
Nov-25	3.873	-58.2
Dec-25	3.860	-59.5

EQUITIES: Recovery for Eurostoxx 50 Futures This Week Resumes Uptrend

Eurostoxx 50 futures have recovered from Monday’s low and the contract traded higher yesterday. The climb marks a resumption of the uptrend that started on Nov 21 ‘24. Moving average studies are in a bull mode set-up too, highlighting a dominant uptrend. The focus is on 5381.13 next, a Fibonacci projection. Initial firm support to watch lies at 5199.02, the 20-day EMA. The 50-day EMA is at 5085.52. Monday’s initial sell-off in the S&P E-Minis contract and a breach of support at 5948.00, the Jan 27 low, continues to highlight a possible short-term reversal threat. If correct, it suggests that the latest bounce is a correction. A resumption of weakness would open 5892.37, a Fibonacci retracement point. On the upside, a stronger rally would expose key resistance at 6178.75, the Dec 6 ‘24 high. Clearance of this hurdle would resume the primary uptrend.

Japan's NIKKEI closed lower by 279.51 pts or -0.72% at 38787.02 and the TOPIX ended 14.97 pts lower or -0.54% at 2737.23.
Elsewhere, in China the SHANGHAI closed higher by 33.008 pts or +1.01% at 3303.667 and the HANG SENG ended 241.92 pts higher or +1.16% at 21133.54.
Across Europe, Germany's DAX trades higher by 18.07 pts or +0.08% at 21932.83, FTSE 100 lower by 18.56 pts or -0.21% at 8714.96, CAC 40 down 5.47 pts or -0.07% at 8010.77 and Euro Stoxx 50 down 6.69 pts or -0.12% at 5353.7.
Dow Jones mini up 24 pts or +0.05% at 44855, S&P 500 mini down 0.5 pts or -0.01% at 6100.5, NASDAQ mini down 8.5 pts or -0.04% at 21842.75.

Time: 09:55 GMT

COMMODITIES: Gold Moving Average Studies Highlight Clear Dominant Uptrend

Recent weakness in WTI futures marks an extension of the current corrective cycle. The 20-day EMA has been breached and attention is on support around the 50-day EMA, at $72.20. It has been pierced, a clear break of it would suggest scope for a deeper retracement. This would open $68.05, the Dec 20 ‘24 low. On the upside, a clear reversal higher would refocus attention on $79.48, the Apr 12 ‘24 high and a key resistance. A bull cycle in Gold remains in play. This week’s appreciation once again, confirms a resumption of the uptrend and maintains the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting a dominant uptrend. Sights are on $2889.9 next, a Fibonacci projection. The first key support to watch is $2711.0, the 50-day EMA. The 20-day EMA is at $2767.4.

WTI Crude up $0.54 or +0.76% at $70.97
Natural Gas down $0.04 or -1.03% at $3.375
Gold spot up $13.05 or +0.46% at $2868.65
Copper up $6.45 or +1.45% at $451.55
Silver up $0.17 or +0.52% at $32.3555
Platinum up $8.82 or +0.89% at $998.74

Time: 09:55 GMT

Date	GMT/Local	Impact	Country	Event
07/02/2025	1200/1300		EU	ECB to publish report on R*
07/02/2025	1215/1215		GB	BOE's Pill at National MPC Agency briefing
07/02/2025	1330/0830	***	CA	Labour Force Survey
07/02/2025	1330/0830	***	US	Employment Report
07/02/2025	1425/0925		US	Fed Governor Michelle Bowman
07/02/2025	1500/1000	**	US	Wholesale Trade
07/02/2025	1500/1000	**	US	U. Mich. Survey of Consumers
07/02/2025	1700/1200		US	Fed Governor Adriana Kugler
07/02/2025	2000/1500	*	US	Consumer Credit
09/02/2025	0130/0930	***	CN	CPI
09/02/2025	0130/0930	***	CN	Producer Price Index