SCOREBOARD: Jobs spark

The good news is that US jobs growth looks like it will be solid again in March with the ADP employment report suggesting that 201,000 jobs were created in the month. Now at the outset, this report doesn't have a great correlation with the more closely watched payrolls report (out this Friday), but it is used as a broad guide. To that end we saw stocks get a bit of a kick, but not much else – the US dollar sold off and treasuries rallied.

On Wall Street, the S&P500 was bid from the open and maintained that trajectory throughout the session, at the close we saw the index up 0.7 per cent (1328) led by telecommunications, utilities and basic materials, but nearly all sectors were stronger. The Dow was 71 points higher (12350), while the Nasdaq was up 0.7 per cent (2776). Elsewhere, we saw the SPI up 0.5 per cent (4866) while European stocks were up between 0.3 per cent (FTSE) and 1.8 per cent (Dax). I'm surprised by the comparative underperformance by the FTSE to be honest. Sure, there has been a lot of concern about the health of the UK consumer lately, but the Confederation of British Industry report sales bounced back in March – the retail index spiking to 15 from 6 and an expectation of -2. The expectations component surged to 18.

Sterling certainly pushed higher (82pips) to 1.6080 as it's going to be very difficult for BoE doves to argue their already flimsy case should sales bounce in the month (as it appears they have). The euro was otherwise up 42pips (1.4131), the Australian dollar was unchanged at 1.0329 and yen was unchanged at 82.9.

Likewise, gilts sold off – the 10-year yield rising to 3.67 per cent from 3.63 per cent. For the rest of the advanced world though, yields were generally flat to lower and indeed US treasuries rallied, although it's not immediately apparent why. Not only did we have decent employment data, a further rally on stocks etc, but demand at Treasury's $29 billion 7-year auction was lacklustre. Cover, at 2.79, was the weakest since November 2010 and indirect bidders (which includes foreign central banks) took about 49.4 per cent of the issue which is just below average. At the close, yields on the 5 and 10-years were down about 5bps to 2.21 per cent and 3.44 per cent respectively, while the 2-year yield was down 2bps (0.8 per cent). Aussie futures traded within a 5-6 tick range with the 3s up 2 ticks from 1630 to 94.93 and the 10s about 5 ticks to 94.51.

Finally for commodities we saw gold up smalls ($1422), copper off 1.8 per cent, while crude was down 0.5 per cent in WTI ($104) and 0.07 per cent on Brent ($115).

There was only a smattering of data otherwise. For the US, mortgage applications fell 7.5 per cent in the week to March 25 after a 2.7 per cent gain with refis down 10 per cent and purchases down 1.7 per cent. In the euro zone, economic confidence slipped to 107.3 in March from 107.9 (so it's still at an elevated level).

Today in Australia we see a few decent data releases including retail sales, building approvals, credit growth and RP Data-Rismark's house price series. Now, for retail I'm looking for a 0.7 per cent increase (market at 0.4 per cent), partly driven by food but also partly by my expectation that the very large and unusual falls we've seen in some components – which have been required to get weak headline numbers – are a little over the top and unsustainable.

The fact that in any given month, 'weakness' in sales has not been broad-based, but rather relied on these outsized, in some case record, falls by competent, rings alarm bells for me. Indeed, I suspect they represent sampling and non-sampling errors rather than actual sales. I say this because the monthly survey has been inconsistent with company reports for quite sometime (company reports suggest sales have been considerably stronger than this monthly retail survey) and it has also been inconsistent with the broader and statistically more robust national accounts. It's further evidenced by the fact that the completely enumerated series (a sample of large retailers which doesn't change month to month) showed much stronger sales in January than the headline figure.

As for building approvals, we saw a flood induced slump in January (-16 per cent) and I expect this to partly unwind in February with a 13 per cent increase (market at 4 per cent).

Tonight, look out for German unemployment (Mar), US factory orders (Feb) and initial jobless claims.

Adam Carr is senior economist at ICAP Australia. See Business Spectator's glossary for definitions of technical terms used in SCOREBOARD articles.