Yesterday the ECB added to the stimulus effect, expanding its emergency bond buying programme by €600 billion, more than what the market had expected. However, the grim staff projections offered support for the move as did today’s German factory orders which declined a record -25.8% mom in April, worse than the -19.7% forecast.
Attention will now turn to the US non-farm payrolls. Expectations are for 8 million jobs to have been lost in May, a significant improvement on the 25 million recorded in April. This would take unemployment to 19.5%, up from 14.7% last month. Given that he ADP private payroll report, a strong lead indicator for the NFP was significantly better than forecast, there is a good chance that today’s jobs report will surprise to the upside. Wages are expected to remain skewed to the upside as more low earners are laid off.
A word on oil
Oil is nudging higher for the fourth straight session, as traders await an OPEC+ meeting which could take place as soon as this weekend. WTI has rallied 5.9% across the week, its sixth consecutive week of gains supported by output cuts and signs of improving fuel demand. The pace of gains has slowed as investors await confirmation, potentially this Saturday as to whether OPEC+ output cuts will be extended. Even if the output cuts are extended there is always the question of compliance.