European markets pause ahead of Non Farm Payrolls despite pleasing Greek PSI bond swap

European markets trading largely flat in early opening to the market as investors paused for breath ahead of the all important US non-farm payrolls release at 1.30pm, despite a high participation rate of the Private Sector Involvement in the Greek bond swap.

The FTSE 100 opened at 5954, slightly lower than yesterday’s close with similar non-moves seen on broader European indices such as the DAX and CAC.

The Greek debt swap has passed through relatively smoothly with an 85% participation rate of private holders of Greek debt, whilst this rate could be pushed higher with the implementation of collective action clauses (CACs) to enforce greater participation.

The high rate that was realised by last night’s deadline was of course widely expected and this was part of the main reason for EU indices bouncing back so strongly over the past 48-hours from Tuesday stock market sell-off.

Therefore, all eyes now switch to the release of the latest US jobs data including non-farm payrolls, private payrolls and unemployment rate. Current market expectations are that we should see non-farm payrolls growth slow to 204,000 from 243,000, with private payrolls also slowing to 257,000 and the US unemployment rate remaining flat at 8.3%.

We have seen consecutive monthly US payrolls far surpassing market expectations and whilst Wednesday ADP employment report came in mostly in line with expectations, it will be interesting to see whether the US labour market can continue to grow at the strength of which the past three months has hinted towards. A strong reading of US jobs could help to convince that the US economic recovery is firmly on track, whilst a weaker reading of around 150,000 could highlight concerns that the recent labour market growth was merely tentative.

Equally being watched by investors before the afternoon’s US jobs release, is the latest UK Industrial Production figures, which are expected to slow to 0.3%. There could be a degree of concern should the actual number slow more quickly than the 0.3% expected, which could re-enforce the perception that the UK economic recovery continues to struggle.