US EARLY MORNING: US equity futures are higher ahead of Eurozone inflation data, and the return of the revamped ADP National Employment report

SNAPSHOT: US index futures are trading around 0.3% higher ahead of key macro data out of Europe, where August inflation metrics are expected to show consumer prices climbing to a record 9.0% Y/Y in August; this data will influence the narrative for the ECB’s meeting next week, and could entail macro implications impacting US markets too. Treasuries are mixed, but the curve isn’t more than around 2bps from neutral, and major curve spreads are also mixed. Meanwhile, the focus for US players will be on the new ADP National Employment report, which returns from a two-month hiatus with a supposedly improved methodology (we discuss below), as well as the Chicago PMI and weekly DoE inventory data. Canada GDP metrics for June and Q2 will also be released. Today’s central bank speak comes by way of Fed’s Mester (voter) and Bostic (2024). Full Day Ahead here.

NEW JOBS DATA: Jobs data will be in focus today with the return of the ADP’s revamped National Employment Report after a two month hiatus, where the largest payrolls provider in the US changed its methodology after criticisms that its predictive power for the official nonfarm payrolls report became tenuous. The ADP's new methodology will be based on its own payrolls data rather than incorporating external models and historical NFP data, and it has said that the new series will have greater transparency, will be more real-time and higher-frequency. The new style report will also include estimates of wage growth in the US, and will report median annual pay growth by industry, business size, region, gender and age; the wonks will appreciate that the ADP will also make available historical data from the previous 12 years at both monthly and weekly points, and will be benchmarked and available at launch. The consensus expectation is for the ADP’s data to show 288k payrolls were added to the US economy (NFP consensus is currently 300k, according to Reuters), but note, the previous 128k that many calendars are carrying refers to the May report. Some reckon we should take the consensus view for the ADP with a pinch of salt; Pantheon Macroeconomics’ says the new methodology "makes it impossible to produce a forecast on any basis other than guesswork, so we are amused to see that Bloomberg has recorded 15 projections from economists willing to have a stab, based on no information whatever."












31 Aug 2022 - 09:17- Research Sheet- Source: Newsquawk

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