OPENING CALL

Stock futures were in the red on Friday and Treasury yields dipped ahead of the eagerly awaited jobs report and the last Federal Reserve speaker before the central bank’s interest rate decision in mid-September.

The Labor Department at 8.30am will publish August jobs data, which is expected to show a rebound in payrolls growth and the unemployment rate easing a tenth of a point to 4.2%.

There also will be a speech from Christopher Waller at 11am, who will have the last word on interest rates before central bank officials go dark ahead of the Sept. 18 rate decision.

Investors are going into the data with a pessimistic view, particularly after ADP data on Thursday showed the weakest private payrolls growth since 2021, and the ISM services report’s employment gauge fell more than anticipated.

Premarket Movers

Broadcom’s revenue guidance fell short of analysts’ forecasts, adding to jitters about the trajectory of AI demand. Shares fell 9%.

Nvidia fell a further 2%, putting it on track to extend recent losses, which began when its blockbuster quarterly results failed to match heady expectations.

Smith & Wesson shares fell more than 7%. It reported a quarterly loss late Thursday, citing slow firearm demand.

UiPath raised its full-year revenue outlook and approved a buyback program, sending shares up almost 10%.

Postmarket Movers

Helen of Troy’s board authorized $500 million in share repurchases. Shares rose 5.7%.

Quanex Building Products posted higher-than-expected third-quarter results and noted an expected rebound for its business following interest rate cuts. Shares rose 12%.

Watch For:

Employment Report for August; Canada Labour Force Survey for August

Today’s Headlines/Must Reads:

-What Lies Behind the Markets’ Jitters

-Trump Proposal to Cut Tax Rate for U.S. Manufacturers Spurs Flurry of Questions

-Harris’s Huge Cash Edge Means Less Need for Her to Headline Fundraisers

-More Debts or Not, Beijing Faces a Thorny Question

-The Putin Propaganda Chief Who the U.S. Says Is Now After American Minds

MARKET WRAPS

Forex:

The DXY dollar index hit a one-week low ahead of the nonfarm payrolls report, which is considered key for determining the scope of expected interest-rate cuts by the Federal Reserve.

The report could be decisive for whether the Fed delivers a 50 basis points rate cut at the September 18 meeting, Danske Bank said. The dollar could rise if the data show a recovery in payrolls growth, an unchanged unemployment rate and stable earnings growth.

“However, the dollar may face downward pressure in the coming month as the Fed initiates its cutting cycle, and risk sentiment could remain positive.”

Commerzbank said the dollar could come under further pressure if the data are significantly weaker, potentially reigniting fears of a U.S recession and prompt the market to price in a higher probability of a 50 basis-points interest-rate cut at the Federal Reserve’s September 18 meeting.

A much stronger report would allay these concerns, increase the likelihood of a 25 basis-point move and boost the dollar.

If the data meet expectations, it will still clear the way for the Fed to start cutting rates this month but this is priced in, so the dollar could unwind some of this week’s falls, Commerzbank said.

ING said Emmanuel Macron’s appointment of Michel Barnier as prime minister is somewhat positive for the euro ahead of an intense EU budget season.

“The fact that a candidate was finally picked is a signal that the more fringe parties in the French Parliament are opening up to dialogue.”

However, there needs to be more clarity on budget negotiations and each party’s priorities to determine whether the euro will rise, ING said.

Bonds:

Markets look to trade for a weak payrolls print, while good data are expected to make Treasury yields bounce, ING said.

“Markets are actually trading as if we are going to get a sub-100,000 payrolls outcome. If we don’t get that type of validation for material slowdown, yields will be under pressure to rise for a bit.”

SEB Research said U.S. data are even more important for eurozone government bond yields than the European Central Bank’s decisions during the autumn.

“If recession worries surface in the U.S., the impact will spill over to ECB expectations and to Bund yields.”

SEB Research’s base case is that the 10-year German Bund yield will trade mostly in the 2.10%-2.30% range during the autumn, versus 2.20% currently, although temporary dips below this range are possible.

For the ECB’s meeting next week, SEB Research expects a 25 basis point rate cut, in line with market pricing.

The appointment of Michel Barnier as prime minister in France is unlikely to lift French government bonds in the long term, Societe Generale Research said.

The new PM will now take on the difficult tasks of forming the new government and dealing with the tricky public finances, but “given the challenges ahead, we do not expect the news to bring long-term strength to OATs.”

SocGen expects the 10-year OAT-Bund yield spread to remain in the 60-75 basis point range.

“The autumn is likely to be the next volatile period for spreads, around the budgetary plan discussions in Europe and in the run-up to the U.S. elections.”

The 10-year OAT-Bund yield spread has narrowed less than 1 basis point, and Citi said the “key reason behind the muted optimism might be that the new government will need support from the far-right RN [National Rally] alongside centrist parties to obtain confidence of the Assembly.”

This might mean risks to government stability and reflection of some far-right priorities in new government policies.

Energy:

Oil prices edged higher but remained on track for weekly losses following OPEC+’s decision to delay its planned output hikes by two months after crude futures dropped to their lowest levels this year.

The group of oil producing countries agreed to extend voluntary production cuts to the end of November, easing worries over a market surplus, but failed to address broader concerns over global demand.

“Markets appear to be underwhelmed with the move. The issue is that the oil balance is in surplus over 2025, suggesting that prices are likely to remain under pressure without OPEC+ taking longer term action,” ING said.

ANZ Research said OPEC+’s decision didn’t come as a surprise given the amount of pressure that oil prices have faced in recent months.

While the move lowers risks of seeing the market moving into a surplus in the fourth quarter, it is unlikely to fully ease concerns over weak demand next year, according to ANZ. It could also signal that the cartel and its allies are still struggling to comply with the previously agreed production cuts.

Metals:

Gold futures were marginally higher.

Pepperstone said the nonfarm payrolls report could be the key to gold’s next significant move–if job growth comes in under 100,000 and the unemployment rate holds at 4.3%, the market will increasingly lean toward a 50 basis point interest-rate cut, a boon for the metal.

This scenario would spark fears of economic deterioration, pushing gold even higher, while stronger payrolls data would reinforce expectations for a smaller 25 basis point cut, keeping gold within its current range.

TODAY’S TOP HEADLINES

7-Eleven Parent Rejects $39 Billion Buyout Offer by Circle K Owner

TOKYO-The Japanese company that operates 7-Eleven convenience stores worldwide has rejected a $39 billion takeover offer by the Canadian owner of Circle K stores, saying the bid is too low.

Tokyo-based Seven & i Holdings said Friday the offer by Canada’s Alimentation Couche-Tard significantly underestimated the value of the company and its potential. Seven & i also said the proposal didn’t sufficiently address regulatory issues including a possible antitrust challenge in the U.S., where both companies have large store networks.

Google Might Have Broken Antitrust Laws, U.K. Regulator Says

U.K. regulators said Google might have breached competition laws by using its dominant market position to favor its own ad services.

“The provisional findings relate to how Google ‘self-preferences’ its own ad exchange-harming competition and, as a result, advertisers and publishers,” the Competitions and Markets Authority said in a statement Friday.

One Bargain You Can’t Find at Costco Is Its Stock-Does That Matter?

Investors love Costco so much they’ll pay more for it than Nvidia. But even famed investor Charlie Munger might balk at his favorite retailer’s earnings multiple today.

In an interview last year, Warren Buffett’s late right-hand man observed that the “trouble with Costco” is that the stock trades at 40 times earnings. “Except for that, it’s a perfect damn company, and it has a marvelous future,” he said.

Apple’s iPhone Event Is Near. The Stock Could Use a Boost.

It’s that special time of year again for Apple fans-the iPhone launch event is here.

Dubbed “It’s Glowtime,” the event will stream on Sept. 9 at 1 p.m. Eastern time on both the company’s website and YouTube.

Fed’s Goolsbee says trending economic data justifies multiple rate cuts, starting soon

The longer-run trend of labor-market and inflation data justify the Federal Reserve easing interest-rate policy soon, and then steadily over the next year, Chicago Fed President Austan Goolsbee said Thursday, in an exclusive interview with MarketWatch.

“The long arc shows inflation is coming down very significantly, and the unemployment rate is rising faster” than Fed officials had expected in June, Goolsbee said.

Eurozone Economy Weaker Than Previously Estimated as ECB Prepares to Meet

The eurozone economy grew less rapidly in the three months through June than previously estimated, making it more difficult for the European Central Bank to secure a soft landing as it seeks to tame inflation.

(MORE TO FOLLOW) Dow Jones Newswires

09-06-24 0615ET