Expect a light week for economic data

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Published Date 5/20/2024

This week gets underway with a calendar full of Fed officials speaking, however there isn’t anything that they will say that will be new news. There isn’t any first-tier data this week that directly measures inflation. On Thursday FLASH May purchasing managers indexes and weekly jobless claims will provide a look on whether the economy is starting to falter or remains resilient. Next Monday is Memorial Day, a lot of absentees as Friday approaches. The bond market will close at 2 pm Friday.

Atlanta Fed Raphael Bostic saying this morning the US economy is slowing but “albeit at a glacial pace”. The slowing will gradually cool inflation. “We do a lot of talking to business leaders and what they’re all telling us is that things are slowing down,” “My outlook is that inflation will continue to fall for this year and into 2025,” he said. But prices will drop at a slower pace than many had expected. He expects one rate cut this year, occurring in the October-December quarter.

Prior to Bostic the 10 year note yield was down 1 bp, after he spoke the 10 increased 2 bps to 4.45%.

Richmond Fed’s Barkin said last week inflation is being fueled by the service sector. Goods producers don’t have much leverage in increasing prices. Barkin pointed out that since 2008 businesses learned that they would lose customers if the increased prices, but he pointed out the pandemic has changed the dynamic, customers were willing to pay up for scarce goods. Barkin said he expects inflation will come down, but it may take some time. “Customers and competitors are going to have to teach people that they don’t have pricing power.”

At 9:30 am the DJIA opened -7, NASDAQ +21, S&P +3. 10 year note 4.45% +2 bps. FNMA 6.0 30 year coupon at 9:30 am -5 bps from Friday’s close and -11 bp from 9:30 am Friday. The 6.5 coupon at 9:30 am -1 bp from Friday and -5 bp from 9:30 am Friday.

Officials from the ECB are saying it will cut rates at its June meeting.

Iran's President and foreign minister were killed in a helicopter crash.

Nothing today, rates should be flat. Last week the 10 year note yield declined to 4.32% before increasing Wednesday, Thursday, and Friday. With the slight increase this morning the 10 year note at 4.45%. Any movement this week will likely come from Fed official's that are speaking every day.

This Week’s Economic Calendar:

Wednesday,

7 am weekly MBA mortgage applications

10 am April existing home sales (4.195 million from 4.19 million)

1 pm 20 year bond auction

2 pm FOMC minutes

Thursday,

8:30 am weekly jobless claims (222K unchanged)

9:45 am FLASH May PMI indexes (manufacturing 50.1 from 50.0, service sector 51.4 from 51.3)

10 am April new home sales (675K from 693K)

Friday,

8:30 am April durable goods orders (-0.5% from +2.6%, ex transportation +0.2% from +0.5%, core capital goods +0.1% unch from March)

10 am May University of Michigan consumer sentiment index (67.4, year ahead inflation 3.5%)

2 pm Bond and mortgage markets close.

Source: TBWS

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