Markets will be focused on labor data this week

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Published Date 4/1/2024

Here are the two events from last Friday when markets were closed: inflation was mild, as expected but revisions to February increased slightly. This morning delated reaction to the data, the 10 year yield at 7:30 am ET +1 bp to 4.22%. The other news on Friday, comments from J Powell below.

Federal Reserve Chair Jerome Powell repeated that the US central bank isn’t in any rush to cut rates as policymakers await more evidence that inflation is contained. “The fact that the US economy is growing at such a solid pace, the fact that the labor market is still very, very strong, gives us the chance to just be a little more confident about inflation coming down before we take the important step of cutting rates,” Powell said Friday at an event at the San Francisco Fed. Fresh inflation data released earlier is “pretty much in line with our expectations,” he said. But Powell reiterated it won’t be appropriate to lower rates until officials are sure inflation is on track toward 2%, the rate they see as appropriate for a healthy economy.

At 9:30 am the DJIA opened -10, NASDAQ +15, S&P +2. 10 year 4.27% +6 bp. FNMA 6.0 30 year coupon at 9:30 am -11 bps from Thursday’s close and -8 bps from 9:30 am Thursday.

At 9:45 am March PMI manufacturing index expected at 52.5 declined to 51.9.

At 10 am March ISM manufacturing index, expected 48.3, reported at 50.3.

Beside key data, this week is jammed with Fed officials speaking but none is likely to say anything that goes against comments from Powell last Friday and his remarks on Wednesday. March employment data on Friday is the main even this week. The 10 year note, regardless of the news or data is locked at the 4.20% level.

The PCE inflation was what was expected although the February inflation was revised higher. The 10 year note stuck at 4.20% and has traded in a very narrow range for two weeks. The consensus remains the fed will make the first cut at the June FOMC meeting; it is a moving target and depends on inflation between now and the May inflation data. The more sensitive 2 year note yield this morning +3 bps while the 10 yeare note 4.28% +7 bps.

This Week’s Economic Calendar:

Monday,

9:45 am PMI final manufacturing expected at 52.5 (reported 51.9)

10 am March ISM manufacturing index (48.3 from 47.8 in February, as reported 50.3)

February construction spending (expected at +0.5% after -0.2% in January, as reported -0.3%)

Tuesday,

10 am February JOLTS job openings (8.8 million from 8.863 million)

February factory orders (+1.0%)

Wednesday,

7 am weekly MBA mortgage applications

8:15 am March ADP private jobs (150K)

10 am March ISM services index (52.7 from 52.6)

12:10 pm Jerome Powell on Economic outlook at the Stanford Business, Government, and Society Forum

Thursday,

8:30 am weekly jobless claims (213K, 210K the prior week)

Friday,

8:30 am March employment data (Unemployment rate 3.9% unch from February, NFP jobs 200K, private jobs +170K, average hourly earnings month/month +0.3% from +0.1%, year/year 4.1% from 4.3%)

3 pm February consumer credit ($20.0B from $19.5B in January)

Source: TBWS

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