— Today, we get the release of the official jobs report from the U.S. Bureau of Labour Statistics at 8:30 AM ET. The median estimate of 92 market economists polled by Bloomberg is that 180,000 workers were hired to nonfarm payrolls in January. The unemployment rate is expected to remain unchanged at 6.7%. “The unemployment rate could have held steady at 6.7%, though the expiration of emergency unemployment insurance benefits at the beginning of the month poses risks of a lower number,” says Guy Berger, an economist at RBS. “1.35 million claimants lost their benefits after December 31st. If a significant fraction of those former claimants was unemployed in December (i.e. without a job but actively looking for work) but subsequently either took a job or stopped looking for work (thereby dropping out of the labour force entirely), that would exert downward pressure on January’s unemployment rate.”
— The jobs report released today is special because the BLS is releasing annual benchmark revisions to previous months’ data alongside it. “The new seasonal factors could materially affect the more recent data,” says Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Last year, for example, fourth quarter payrolls were revised up by an average of 50,000 per month. We have no way of knowing whether this will be repeated today, but the potential scale of the revisions means it is even more important than usual to look beyond the January payroll number to see the real story in the report.”
— The German constitutional court delivered an unexpected ruling on OMT — the ECB’s as-of-yet-unused monetary backstop for the eurozone — this morning, expressing concerns that the policy instrument may not be compatible with the mandate of the central bank. It said it would instead refer the case to the European Court of Justice to let it decide on the legality of OMT, and the euro weakened a bit on the news. “The timing and aggressiveness of its stance has taken the markets by surprise,” says Marc Chandler, head of global currency strategy at Brown Brothers Harriman. “Just yesterday when asked, Draghi reassured investors that the ECB is well within its mandate and this is most likely based on legal advice and the ECB reiterated that view today. There is a sense that the European Court will not risk the stability that OMT appears to have provided, but it does add a new element of uncertainty.”
— In the week ended February 5, investors staged a historic move out of stocks and into bonds. Bond funds received $US14.8 billion in inflows, while equity funds suffered $US28.3 billion of outflows — both record figures. “The inflow into bonds was driven by U.S. bond funds, which saw $US23 billion of inflows,” say Citi analysts Markus Rosgen and Yue Hin Pong. “On the flip side, U.S. equity funds were hit by a $US24 billion outflow. More than 95% of these flows were attributed to ETFs.”
— S&P 500 futures are higher while U.S. Treasury note futures are slightly lower headed into the release of the jobs report at 8:30 AM. Across Europe, equity indices are rallying, and peripheral eurozone government bond yield spreads are compressing in the wake of the German court ruling, indicating markets are taking it as a good sign (perhaps because the European Court of Justice is more likely to rule that OMT is legal). In Asia, the Japanese Nikkei 225 closed up 2.2% on Friday, and the Hong Kong Hang Seng advanced 1.0%. The dollar is up slightly against the euro and the yen.
— December U.S. consumer credit data are released at 3 PM ET. Economists predict total credit expanded by $US12 billion after posting a $US12.318 billion gain in November. Follow all of the data LIVE on Business Insider »
— A client survey conducted by CRT Capital government bond strategists David Ader and Ian Lyngen this week provides some insight on what market participants believe is driving the stock market sell-off. “When asked what themes were at hand, we got the most votes for weakness in global markets — EM and China specifically cited — with 36% of the blame,” says Lyngen. “Following on that was tapering by the Fed with 24%, and then strategic allocations to lock in risk performance with 20%. 10% went to weaker U.S. data due to weather, with another 10% to ‘other.’ Other in this case was largely about positions and a generic weaker outlook for the U.S.”
— LinkedIn shares are down more than 6% in pre-market trading following the release of earnings results for the quarter ended December 31. Although the company beat analysts’ consensus estimates on both the top and bottom lines — reporting earnings per share of $0.39 ($0.38 expected) and revenue of $447.2 million ($437.8 million expected) — the outlook for 2014 was not as upbeat as analysts expected. LinkedIn said it expected to bring in between $US2.02 billion and $US2.05 billion in revenues this year, below analysts’ consensus estimate of $US2.17 billion. The company’s EBITDA estimates were light as well.
— German industrial output unexpectedly fell 0.6% in December from the previous month after advancing an upward-revised 2.4% in November. Economists predicted output would rise 0.3%. On a work-day adjusted year-over-year basis, output advanced 2.6% — below estimates for a 3.5% gain — after rising 3.8% in November.
— U.K. industrial output rose 0.4% in December from the previous month after declining by 0.1% in November. However, the number missed expectations of a 0.6% advance. On a year-over-year basis, output rose 1.8%, slowing from a downward-revised 2.1% in November and missing expectations for a 2.3% year-over-year advance.