AM Notes: Two million NFP?

A mixed bag in Asia...

Everything else pretty flat while we wait for the main event...

1.1 million the median guess, TD the lowest at 875k, & Jefferies way out on their own with 2.1 million...

 ðŸ‡ºðŸ‡¸ðŸŽ¯ Dealer #NFPGuesses

Jeff 2.1mn

GS 1.3mn

Nomura 1.3mn

Scotia 1.3mn

DB 1.275mn

MS 1.25mn

NW 1.25mn

BNP 1.15mn

Citi 1.15mn

BMO 1.1mn

CS 1.1mn

RBC 1.1mn

WF 1.1mn

UBS 1.02mn

Daiwa 1.0mn

JPM 1.0mn

AP 965K

Barx +950K

BoA +950K

HSBC +900K

Mizuho +900K

SG +900K

TD +875K

Median +1.1mn— Anthony Barton (@ABartonMacro) May 7, 2021 

PiQ

CQ

Clearly we're going to see a solid print, but its the market reaction I'm most interested in.

Are we at the point where strong data is negative for risk?

Perhaps it's still early to worry excessively about the liquidity punchbowl being removed, but at some point the focus will shift...

As the Fed noted in yesterdays Financial Stability Report

"Prices of risky assets have risen further on the improved economic outlook, and valuations are generally high"

Fed policy isn't based on asset valuations though, so markets are unlikely to be spooked today unless the print is way up in the stratosphere

8.5 million jobs still to recover...  

'Substantial progress' hasn't been formally defined, but at least another 5 or 6 million jobs need to be recovered before they can start hinting, surely...

On the month so far, there have been signs of a rotation into the reflation / reopening / cyclical trade

Yesterday was a 'Buy Everything' day...

The S&P now sits just below 4200, at the same level as when I did this poll...

 Question for the wonderful FinTwitterati

What's your view on the S&P 500 from here?

(Please RT for sample size)— 📈 Transitory Tim 📉 (@VolaTim) April 29, 2021 

April PMI data signalled a sharp expansion of Chinese service sector business activity, that was supported by the strongest rise in overall new work for five months. In order to meet rising customer demand businesses increased their staff numbers at a faster rate, which helped to alleviate pressure on capacity. Input costs meanwhile rose solidly, which prompted firms to raise their prices charged again.

"The Caixin China General Composite PMI came in at 54.7 in April, stronger than 53.1 the previous month and hit the highest level this year. The gauges for total demand, supply, employment and overseas demand were all in expansionary territory. Surveyed enterprises remained confident about the economic outlook in the next 12 months. Both the gauges for input costs and output prices stayed at a high level, indicating high inflationary pressure.

"To sum up, the post-epidemic manufacturing and services recovery accelerated as both supply and demand expanded. Business confidence was high amid strong overseas demand and improved employment. Services recovered faster than manufacturing. Inflation will be a focus in the future. Inflationary pressure was evident as input costs and output prices in manufacturing and services have continued to increase for several months.

"Policymakers have expressed concerns about rising commodity prices on several occasions and urged adjusting raw material markets and easing businesses’ cost pressure. In the coming months, rising raw material prices and imported inflation are expected to limit policy choices and become a major obstacle to the sustained economic recovery.

The deleveraging continues nonetheless...

In this video Leland Miller (China Beige Book) points out that the Q1 data is showing less credit appetite by SOE's (although he doubts it will continue for long)...

And China is facing a far more hostile international climate than ever before....

As Newsquawk noted this morning: risk appetite in the mainland was tempered by the hawkish US-China rhetoric in which sources noted that top US and Chinese trade negotiators may hold talks soon to review the Phase 1 trade deal and that the Biden administration is likely to go ahead with former President Trump's China investment ban, while there were also comments from President Biden that the Chinese are "eating our lunch" economically and officials noted that Secretary of State Blinken is to keep pressure on China in his UN speech today.