With China markets closed for holiday until the middle of next week, and little in terms of global macro data overnight (the only notable central banker comment overnight came from Mario Draghi who confidently proclaimed that "economic growth is returning" which on its own is bad for risk assets), it was all about the USDJPY which has seen the usual no-volume levitation overnight, dragging both the Nikkei higher with it, and US equity futures, which as of this moment were at session highs, up 7 points. The calm may be broken, though, as soon as two hours from now when the September "most important ever until the next" payrolls report is released. And speaking of calm before the "storm", with the east coast bracing for the landfall Hurricane Joacquin, it may have been much ado about nothing, with Bloomberg reporting that many projections now show the hurricane will actually miss the eastern seaboard. Joaquin raked parts of the Bahamas with top winds of 130 miles (209 kilometers) per hour, and that will probably last into Friday, the center in Miami said in an 2 a.m. advisory. The storm was 15 miles east-southeast of Clarence Town on Long Island in the Bahamas. It was moving west at 3 mph. The center has shifted its projected track for the storm, predicting it will sweep south and east of Massachusetts’ Cape Cod by Tuesday afternoon, after several more computer forecast models favored a miss by Joaquin. “The strong majority of forecast models are now in agreement on a track farther away from the United States east coast,” Jack Beven, a senior hurricane specialist at the center, wrote in an analysis on Thursday. “We are becoming optimistic that the Carolinas and mid-Atlantic states will avoid the direct effects of Joaquin.” So with the weather update out of the way, here is a closer look at global markets. Asian stocks traded mixed amid position squaring ahead of today's NFP report. ASX 200 (0.0%) was initially led lower by weakness in large banks and mining names after iron ore fell for the 3rd time in 4 sessions. Nikkei 225 (+0.02%) traded mildly higher amid mixed data releases in which household spending rose to its highest in 3-months while there was also an increase in unemployment. Hang Seng (+3.2%) bucked the trend as it played catch up to yesterday's firm gains in Asia with Casinos outperforming in Hong Kong after a narrower decline in Macau gaming revenues, coupled with reports that China is to support the Macau region. JGBs traded flat in a relatively quiet session, as participants await the US jobs report, while the BoJ conducted market operations to purchase JPY470 Bn in government debt. Barclays brought forward its forecast for BoJ easing to October 30th from April 2016, but sees risk also of possible action in October 7th, while UBS said it sees a 50% chance of the BoJ easing in Q4. European stocks also traded higher (Euro Stoxx: +1.3%), though given the looming release of the latest US NFP release meant that trade volumes were below the average levels and in turn resulted in somewhat range bounce price action across various asset classes. At the same time, Bunds edged lower since the open, with peripheral bond yield spreads little changed on the day. Financials outperformed on the sector breakdown, particular UK names, following reports that the Financial Conduct Authority (FCA) is launching a consultation on setting a deadline for PPI complaints. FX markets have seen GBP outperform its major peers, benefiting from the release of the much better than expected UK construction PMI (59.9 vs. Exp. 57.5), while despite the looming risk events, USD/JPY remained bid. Worth noting for JPY, analysts at Barclays brought forward forecast for BoJ easing to October 30th from April 2016, while also highlighting risk of possible action in October 7th. At the same time, analysts at UBS see a 50% chance of the BoJ easing in Q4. WTI and Brent crude futures trade in positive territory today heading into the NYMEX pit open , however with both commodities still on track to end the week in negative territory. Elsewhere, metals are trading lower in line with the stronger USD as well as the continued growth concerns surrounding China, with the notable exception of palladium , which trades in positive territory on the back of the Volkswagen scandal. Of note, volumes are particularly light today in the run up to the NFP report. Going forward, market participants will get to digest the release of the latest US NFP report, factory orders, durable goods, as well as any comments on monetary policy by Fed's Rosengren, Harker, Kocherlakota, Bullard, Mester and Fischer. Bulletin Headline Summary from RanSquawk and Bloomberg Stocks in Europe traded higher, though the looming release of the latest US NFP release meant that trade volumes were below the average levels GBP outperforms its major peers, benefiting from the release of the much better than expected UK construction PMI As well as US NFP report today's highlights include US factory orders, durable goods and comments by Fed's Rosengren, Harker, Kocherlakota, Bullard, Mester and Fischer Treasuries decline, 10Y paring weekly gain, before report forecast to show U.S. economy added 201k jobs in Sept., unemployment rate held at 5.1% and average hourly earnings grew 0.2%. Stocks in Hong Kong rose after China cut passenger-vehicle tax as targeted support for economy; casino operators gained after a report Beijing may unveil measures to support Macau tourism The U.S. and six other nations backing rebels fighting to oust Syrian President Bashar al-Assad called on Russia to cease attacks against the country’s opposition, saying air strikes that have killed civilians risk fueling extremism For a handful of well-known hedge fund managers, 2015 is looking a lot like 2008, when their industry suffered record losses and investor withdrawals Throughout the 2016 presidential primary campaign, Hilary Clinton has taken a markedly less critical view of large financial institutions like Citigroup than Democrats like Elizabeth Warren and presidential rival Bernie Sanders While forecasters haven’t ruled out a U.S. East Coast strike by the Category 4 hurricane pounding the Bahamas with heavy rains and raging surf, more projections are showing Joaquin will miss, the National Hurricane Center said Sovereign 10Y bond yields mostly higher. Asian and European stocks mostly higher, U.S. equity-index futures rise. Crude oil and copper gain, gold falls US Event Calendar 8:30am: Change in Nonfarm Payrolls, Sept., est. 201k (prior 173k) Change in Private Payrolls, Sept., est. 198k (prior 140k) Change in Mfg Payrolls, Sept., est 0 (prior -17k) Unemployment Rate, Sept., est. 5.1% (prior 5.1%) Avg Hourly Earnings m/m, Sept., est. 0.2% (prior 0.3%) Avg Hourly Earnings y/y, Sept., est. 2.4% (prior 2.2%) Avg Weekly Hours All Employees, Sept., est. 34.6 (prior 34.6) Underemployment Rate, Sept. (prior 10.3%) Change in Household Employment, Sept. (prior 196k) Labor Force Participation Rate, Sept. (prior 62.6%) 9:45am: ISM New York, Sept. (prior 51.1) 10:00am: Factory Orders, Aug., est. -1.2% (prior 0.4%); Factory Orders Ex Trans, Aug. (prior -0.6%) Central Banks 8:45am: Fed’s Harker speaks in Philadelphia 12:30pm: Fed’s Bullard speaks in New York 1:30pm: Fed’s Fischer speaks at Boston Fed conference; Rosengren, Dudley, Mester, Kocherlakota scheduled to participate DB's Jim Reid Completes the overnight event wrap Its payroll Friday again, and although the employment report is of course crucial to second guessing the Fed, it does seem that there are even bigger global issues at the moment that will exert a stronger short-term influence on the Fed. Nevertheless its always important and given the growth fears at the moment a stronger report would probably be better received this month than in the recent past where strong data would have raised concerns about tighter policy. For now the market will likely be relieved to see some strength. The market and DB is expecting the September print to rise to +200k from +173k in August and for the unemployment rate to remain steady at 5.1% and the average hourly earnings rate to grow by +0.2% MoM (down from +0.3% MoM last time around). We will revisit our oft-updated PMI/equity performance regressions in more details below as well as the usual recap of key developments but we’ll first take stock at how Asia is responding this morning to the late US rally yesterday. With China onshore equities closed for its week-long National Day holiday, the Hang Seng (+2.7%) and HSCEI (+3.2%) are the two standout performers in what has been generally a positive session for North Asian equities. The better tone in China comes after more stimulus announcements from authorities. First home buyers’ down payment requirements were reduced to 25% from 30% by PBOC. A tax on passenger vehicle purchases were also reduced while a Bloomberg headline also noted that China is studying measures to revive the slump in Macau’s economy. Asian credit markets are also firmer with IG benchmark cash spreads around 2-4bps tighter on the day although volumes are usually on the lower side on a pre-payrolls Friday. China headlines aside, Mario Draghi’s speech in New York overnight was one of the anticipated events although it offered little insights on ECB’s monetary policy outlook. In his prepared remarks, Draghi highlighted the progress achieved over the last 3 years to stabilize and strengthen the euro area. Emphasizing that the Euro area is crucially relevant for the global economy, he highlighted that growth is returning to Europe after having been a drag on global growth over the last 7-8 years. With global growth in mind, today's payrolls comes hot on the heels of yesterday's global PMIs. Given the falls in both PMIs of late and especially equities we thought we'd revisit our old regressions between PMIs and the YoY change in equity markets to see what's priced in this simple relationship (see PDF for the table). Interestingly with the exception of Japan and China, equities are now under-performing relative to what the current levels of manufacturing PMIs would suggest. Actual equity performance has been equivalent to PMIs below 50 across the world (apart from in Italy) but only China’s PMI is actually sub-50. We can also see that if PMIs remain at current levels into year-end then there’s decent double-digit upside for US, German, Spanish and UK equities. Whilst the level of PMI’s is hardly the only determinant of equity performance, this analysis adds to the case that markets may have weakened faster than fundamentals in Q3. Obviously it could be that PMIs weaken further in Q4 but we are certainly pricing a move sub-50 across the globe. The first day of the new quarter started on a strong note but soon soured before a late US rally lifted spirits. Indeed European markets slowly gave away their initial gains with the Stoxx 600 opening the day up 1.5% before ending the day down -0.4%. European credit markets went through a similar pattern with Xover ending the day about 20bps wider from its opening tights. US markets fell with Europe with the S&P500 dipping as much as 1% intraday but ending the day +0.2% higher after a late rally into the US closing bell. The CDX HY index followed a similar path where it was down as much as 0.5pt from its intraday highs before closing the day around 1/8ths of a point higher. The equity and credit market’s struggles as the day wore on were matched in the commodity markets as WTI closed the day down 5% from its intraday high (but closed just around 0.8% lower on the day). Turning to yesterday’s data there were a number of interesting prints. In Europe we had first September manufacturing PMI data from Spain and Italy and final numbers from Germany, France and the Euro area. The Spanish and Italian reads both came in notably lower than expected at 51.7 and 52.7 respectively, down relatively sharply from 53.2 and 53.8 previously. The French final number was actually revised up slightly to 50.6 (from 50.4) whilst Germany was revised down from 52.5 to 52.3 leaving the euro area aggregate steady at 52. In the US, initial jobless claims rose to 277k, slightly higher than the 271k expected by street consensus and 10k higher than last week’s reading. Jobs aside, the final Markit US manufacturing PMI was revised up slightly to 53.1. We also saw a notable drop in the September ISM manufacturing reading. The series fell from 51.1 to 50.2 (vs 50.6 expected) to the lowest print since May 2013. Some of the details in the ISM report looked soft to us. Indeed sub-indices of new orders, employment, and prices paid were down 1.6pt, 0.7pt and 1pt to 50.1, 50.5 and 38.0, respectively. The ISM manufacturing index has been declining throughout the summer. With the series barely above expansion territory, readings for the remainder of the year will likely be closely monitored. Staying on the theme of economics, market sentiment yesterday was perhaps not helped by subdued comments made by World Bank President. Mr Jim Yong Kim told CNBC that global growth will be slow especially in EM and argued that a Fed hike this year would have serious ramifications for EM. His comments came after those from Christine Lagarde of the IMF earlier this week in which she said warned that EM faces a fifth consecutive year of slowing growth. Growth concerns along with uncertainties around Fed policy have been weighing on EM fund flows. The IIF earlier this week said that it expected flows to emerging markets to fall to just US$548bn this year, lower than levels recorded in 2008/09 (FT). The focus on EM is unlikely to go away in a hurry. Indeed the topic will likely be a key agenda for central bankers and finance ministers at the IMF and World Bank annual meeting in Lima next week. Looking at the rest of the day ahead beyond payrolls, we will also get the New York ISM and US August factory orders (with the number expected to drop to -1.2%). We will also hear from Harker, Bullard and Fischer from the Fed. Eurozone PPI for August is the only notable release from Europe so all eyes will be on Payrolls today.