Markets are waiting on key jobs data, writes Bill Baruch, President of  BlueLineFutures.com.

 E-mini S&P (ESH)

Yesterday’s close: Settled at 2750, down 21.50

Fundamentals: U.S benchmarks are under pressure again today and nonfarm payroll is front and center at 7:30 am CT. The overnight was broadly ugly with China’s Shanghai Composite losing 4.4%; weakness from U.S hours carried into the evening and a poor start in Asia got worse after February Chinese Exports came in at -20.7% year-over-year. Japan’s Nikkei and Hong Kong’s Hang Seng are each down 2%. All of this comes after the ECB surprised just about everyone by going full dove at their policy meeting early yesterday. They lowered their 2019 growth forecast to 1.1% from 1.7% and announced they will reintroduce the long-term financing operation for banks known as TLTRO. Less than six months ago, the ECB was expected to hike rates this autumn, instead they will be providing additional liquidity in September. The markets took this in stride, initially trading higher because, well, the second largest central bank in the world just loosened policy. However, the banks didn’t like this and the MSCI European Financials ETF finished down 2.74% (XLF -1.03%). Ultimately, the S&P had gained as much as 13% on the year and yesterday the market said, ‘wait a minute, maybe this is too much too fast, maybe I should take a pause and understand why every major central bank has quickly gone from tightening to loosening or neutral on policy’. In recent days, we have pointed out that some of the data in Europe has begun to turn a corner; sentiment is broadly less-worse and final PMIs weren’t as bad as feared. This arguably could have given the ECB a reason to watch and wait for at least another month. The fact that they didn’t really has to make you wonder how much they fear the future. Although there were some bright spots on the economic calendar this morning, the most important read from Europe was Germany Factor Orders which came in at -2.6%

Nonfarm Payroll this morning is all about the wages. Average Hourly Earnings is expected to come in at +0.3% and +3.3% annualized. If this number comes in hot, the dollar will rally and likely add pressure to equity markets as this would certainly keep the Federal Reserve from being in dovish territory. Now, if this number comes in light there is no reason for the Fed to be anything but patient in an economy that is showing no signs of overheating; this outcome is what the equity market is begging. Job growth has become a barometer of consumer health, meaning a stronger number has been seen as a positive to equity markets; expectations are for +181,000 jobs in February.

As we move through today’s session, it is important to know that Fed Chair Powell speaks at 9:00 pm CT and Chinese inflation data (PPI and CPI) is due at 7:30 pm CT.

Crude Oil (CLJ)

Yesterday’s close: Settled at $56.66, up 44¢

Fundamentals: Crude oil is sharply lower this morning, down 2.5% on the heels of poor economic data: Chinese Exports -20.7%, Imports -5.2% and German Factory Order -2.6%. A broadly weaker global risk-sentiment and a Dollar Index that gained about 1% yesterday have both also contributed to the rout. Remember, early this week Crude did shake off a somewhat bearish headline inventory report. More importantly though it has attempted to break out no less than three times and the bulls are a bit exhausted. Traders must keep a close eye on that broad risk-appetite as the day develops. Baker Hughes Rig Count is due at noon CT.

Technicals: We shifted from slightly bullish bias this week to neutral ahead of the EIA report.

Gold (GCJ)

Yesterday’s close: Settled at $1,286.1, down $1.50

Fundamentals: As quietly as it ever could have, gold had a magnificent session yesterday. The Euro shed 1%, lifting the dollar. Gold is priced in dollars and for gold to hold ground unchanged is a feat. This is because the ECB went full dove (see our S&P section for more detail) and sovereign debt yields got smoked. Gold loves lower yields, and this fits right within our narrative that yields are trending lower for longer and a major reason why we are unequivocally bullish gold long-term. Gold is trading higher this morning on broadly weaker global data, however, today’s jobs data can deny Gold’s early session strength if wage growth comes in stronger than expected at +0.3%. However, if Nonfarm Payroll misses, we expect Gold to gain at least 2% before the end of the day. Lastly, know that Fed Chair Powell speaks this evening at 9:00 pm CT when you consider what you might take home for the weekend.

Bill Baruch provides technical levels on all markets throughout the week at  BlueLineFutures.com