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10 Feb 2014
Flash: Still expecting growth in Q2 despite NFP’s - BAML
FXStreet (Barcelona) - Ian Gordon, FX Strategist at Bank of America Merrill Lynch noted the surprises that came from the Nonfarm Payrolls report across markets. Still expecting a pick up in Q2 2014.
Key Quotes
"The weaker-than-expected January non-farm payrolls report took the market by surprise with the US dollar, S&P 500 and Treasury yields all falling sharply on its release. The initial response later reversed with the S&P500 ending the session over a percent higher while the US dollar and Treasury yields finished lower, on net. Combined with a widening of spot and forward breakeven rates of inflation, price action implies the market is pricing in somewhat slower tapering and/or has pushed out the expected path of the Fed Funds rate."
"Despite the second consecutive miss in total non-farm payrolls, and a recent soft patch in the data, we continue to believe the US economy will recover strongly in 2014. Our economists favor looking through the data because of the impact of cold weather and usual month to month noise, though they did lower their 1Q14 forecasts to 2% reflecting this data softness."
"They still expect a strong pickup in 2Q14, however. We recommend looking through the softness in the prior two jobs reports and taking advantage of better entry levels for long USD positions."
"We already know that auto sales and chain store sales were softer."
Key Quotes
"The weaker-than-expected January non-farm payrolls report took the market by surprise with the US dollar, S&P 500 and Treasury yields all falling sharply on its release. The initial response later reversed with the S&P500 ending the session over a percent higher while the US dollar and Treasury yields finished lower, on net. Combined with a widening of spot and forward breakeven rates of inflation, price action implies the market is pricing in somewhat slower tapering and/or has pushed out the expected path of the Fed Funds rate."
"Despite the second consecutive miss in total non-farm payrolls, and a recent soft patch in the data, we continue to believe the US economy will recover strongly in 2014. Our economists favor looking through the data because of the impact of cold weather and usual month to month noise, though they did lower their 1Q14 forecasts to 2% reflecting this data softness."
"They still expect a strong pickup in 2Q14, however. We recommend looking through the softness in the prior two jobs reports and taking advantage of better entry levels for long USD positions."
"We already know that auto sales and chain store sales were softer."