It's jobs day, Powell confirmed as Fed nominee, and the GOP tax plan has winners and losers.
Payrolls
At 8:30 a.m.
Eastern Time, the Bureau of Labor Statistics will release payrolls
data, with expectations for a blow-out 313,000 new positions added as
Americans roiled by the hurricane season return to work.
Rebuilding efforts in areas hit by the storms may further boost the
rebound from September’s disappointing number. Consensus is for
unemployment to remain stable at 4.2 percent and for pay growth to have
slowed.
Powell-led Fed
President Donald Trump yesterday confirmed Jerome Powell
as his nominee for Federal Reserve chair. Mike Crapo, chairman of the
Senate Banking Committee, said his goal was to have Powell confirmed by
year-end. For bond investors, a Powell-driven Fed is viewed as
something of a known quantity
as he has voted with the consensus during his five-and-a-half-year
tenure on the board of governors. Further Fed vacancies remain, with the
nominees for board positions unknown. Powell’s lack of economic
training may challenge his efforts to forge a consensus on the policy-making committee.
Tax plan
The long-awaited Republican tax plan was published yesterday, with the bill estimated to add $1.49 trillion to the budget deficit. The headlines include the promised corporate tax cut
to 20 percent, the reduction of most individual tax brackets, and the
phasing out of the estate tax over five years. The details of some of
the smaller measures moved markets. Homebuilders slid after a measure to
cap mortgage-interest relief was included, while Tesla Inc. shareholders saw an already bad session yesterday get worse when the $7,500 credit for electric-vehicle purchases
was cut in the proposed plan. But, overall, the equity market reacted
calmly to the details, with the S&P 500 Index closing less than a point lower.
Markets rise
Overnight,
the MSCI Asia Pacific Index excluding Japan rose 0.1 percent, while
markets in Tokyo were closed for a holiday. In Europe, the Stoxx 600
Index was a nudge higher, with French automaker Renault SA among the
biggest gainers after the government announced it was cutting its stake
in the car manufacturer. S&P 500 futures were broadly unchanged,
the 10-year Treasury yield was at 2.352 percent, and gold was slightly
lower as investors await the jobs report.
Restructuring
President Nicolas Maduro said Venezuela will seek to restructure
its global debt following one more payment by the state oil company
today. PDVSA bonds maturing in 2027 were quoted at 20 cents on the
dollar in London this morning. All told, there’s $143 billion in foreign
debt owed by the government and state entities, according to Torino
Capital. Mark Mobius, the executive chairman at Franklin Templeton’s
emerging markets group, said he’s glad to be on the sidelines for this one as he’s been out of the trade since Hugo Chavez came to power in 1999.