The focus today will be the FOMC policy statement

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Published Date 5/1/2024

Its May Day and the FOMC meeting. Rates began unchanged from yesterday’s selling that sent MBS prices down 36 bps and the 10 year note up 7 bps to 4.69%. Not only FOMC but we have key data prior to the policy statement at 2 pm ET.

MBA applications last week declined 2.3% from the prior week, purchase applications -1.7% and re-finances -3.3%.

At 8:15 am April ADP private jobs expected at 183K increased 192K, the prior week revised from 184K to +208K. The job market is not cooling down much based on that data, ADP and BLS jobs do deviate from each other. BLS jobs report on Friday, forecasts for jobs growth 240K but BLS data includes government jobs that ADP does not.

At 9:30 am the DJIA opened +23 after falling 507 yesterday, NASDAQ -12 after dropping 325 yesterday, S&P -7 from -80 yesterday. 10 year at 9:30 am 4.65% -3 bps. FNMA 6.0 30 year coupon at 9:30 am +19 bps from yesterday’s close and +6 bps from 9:30 am yesterday.

At 9:45 am April PMI manufacturing index expected at 49.9, reported at 50.0.

At 10 am key March JOLTS job openings, expected at 8.70 million down from 8.75 million in February, reported 8.488 the lowest since February 2021. April ISM manufacturing index declined to 49.2, under 50 suggests contraction, employment jumped 1.2 percentage points to 48.6, prices paid rose 5.1 to 60.9 in April.

This afternoon at 2 pm is when the markets will react to the FOMC statement, then at 2:30 pm Fed chief Powell will hold his press conference. Markets don’t expect a rate cut. Two weeks ago, Powell in a speech said rates could be higher for longer. Let’s see what he says this afternoon, the wrong take in the markets will send the 10 year note higher and stocks lower. Whatever occurs we expect high volatility this afternoon.

Source: TBWS

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