Here is what you need to know.
Friday is jobs day. US non-farm payrolls are expected to have increased by 160,000 in May, according to economists surveyed by Bloomberg. In addition, the unemployment rate is forecast to slip to 4.9% as average hourly earnings grew by 2.5% year-over-year. The data will cross the wires at 8:30 a.m. ET.
The UK referendum could delay a Fed rate hike. The UK referendum is scheduled for June 23, and that might be a good enough reason for the Fed to wait on a rate hike. Reuters reports, Fed Governor Daniel Tarullo told Bloomberg that a Brexit would be a “factor” that he would consider. The Fed holds its next policy meeting on June 14-15.
China’s services sector is slowing. The Caixin-Markit services purchasing managers’ index (PMI) slipped to 51.2 in May, making for its lowest reading since December. Looking at the internals of the report, the pace of new orders slowed, but employment gained for a second consecutive month. “A number of companies forecast that improving client demand and planned company expansions will support higher business activity over the next year, but there were reports that an uncertain economic outlook weighed on the overall level of business confidence,” Markit said.
The eurozone is stuck in a ‘low gear.’ Eurozone PMI printed 53.1 in May, a slight improvement from April’s 53.0, according to Markit. French services were a standout, hitting a seven-month high of 51.6 while Italian services dropped sharply to 49.8. “The final PMI numbers for May have come in slightly ahead of the earlier flash readings, but still point to a eurozone economy which seems unable to move out of low gear,” noted Chris Williamson, Markit’s chief economist. The euro is down 0.1% at 1.1140.
Investors keep pulling money out of Bill Gross’ old fund. The PIMCO Total Return Fund saw a 37th straight month of outflows in May, Morningstar data showed. Assets under management totaled $86.1 billion at the end of the month, down from $87 billion in April. “Assets have gravitated toward funds with both strong records and long tenured management both at Pimco and at other asset managers such as DoubleLine Capital,” Todd Rosenbluth, director of exchange-traded and mutual fund research at S&P Global Market Intelligence, told Reuters’ Jennifer Ablan.
Citigroup’s second quarter is going to be rough. Speaking at an investor conference in New York, Citigroup CEO Michael Corbat warned Q2 net income is going to be about 25% lower than a year ago, Reuters reports. The bank has had difficulty navigating a tough trading environment and increased regulation. Citigroup will report its Q2 results on July 15.
Twitter and Yahoo reportedly held merger talks. The New York Post reports Yahoo CEO Marissa Mayer met with Twitter management about a possible combination. However, talks don’t seem to have been too serious as Twitter CEO Jack Dorsey wasn’t in attendance. A second round of bids for Yahoo is due next week.
BP has agreed to a settlement with shareholders over the 2010 Deepwater Horizon oil spill. The oil giant has agreed to pay $175 million to shareholders who said they were misled about the severity of the Deepwater Horizon oil spill, Reuters reports. BP says the lawsuit will be paid out between 2016 and 2017. The lawsuit is unrelated to BP’s civil settlement with the US government and five states that could cost as much as $18.7 billion.
Stock markets everywhere are higher. Australia’s ASX (+0.8%) led the overnight advance and Britain’s FTSE (+1%) paces the gains in Europe. S&P 500 futures are unchanged at 2103.75.
US economic data is heavy. Aside from the jobs report, the trade balance will be released at 8:30 a.m. ET before both factory orders and ISM services cross the wires at 10 a.m. ET. The US 10-year yield is unchanged at 1.80%.