Markets will be focused on labor data and Fed comments this week

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Published Date 3/4/2024

The 10 year note at 8:30 am ET 4.23% +5 bps after declining 8 bps Friday and settled at a new low from the last three weeks. MBSs +25 bps Friday, this morning at 8:30 am -17 bps. No follow through from the improvements.

There isn’t anything on the calendar today, but the rest of the week has a few key reports. The prime focus, Jerome Powell’s semi-annual testimony to Congress; Wednesday at the House Financial Services Committee, Thursday at the Senate Banking Committee, Feb employment data on Friday.

Last Thursday’s February PCE inflation data was right on expectations, offsetting the increase seen on the CPI data, Friday rates declined, the 10 breaking below its three-week low to 4.18%. This morning with Jerome Powell testimony and February employment day rates inched higher.

Powell isn’t likely to override all the Fed officials’ comments recently, but his answers to questions are key. Expect him to confirm what other Fed officials have said, the Fed is looking at incoming data as to when it will begin cutting rates and reaffirm the Fed is in no rush to cut until inflation is definitely declining. The present consensus in markets, three cuts this year beginning at the June FOMC meeting. Fed comments recently center on waiting for more data to confirm inflation is abating, and less likely to increase. Recent inflation reports showing a mixed picture. Powell will likely accentuate that outlook. Members of Congress may press him on the expanding US debt and how it can be paid, increasing thoughts funding the debt using more short-term securities.

Beside Powell this week there are a few Fed officials speaking, not likely to conflict with what Powell has to say. The calendar has a lot to digest, employment, inflation from productivity and unit labor costs, JOLTS job openings, weekly jobless claims.

At 9:30 am the DJIA opened -154, NASDAQ -21, S&P -6. 10 year note 4.23% +5 bps. FNMA 6.0 30 year coupon at 9:30 am -11 bps from Friday’s close and +13 bps from 9:30 am Friday.

This Week’s Economic Calendar:

Tuesday,

9:45 am PMI February final (manufacturing 51.4, services 51.3)

10 am February ISM services sector index (53.0)

January factory orders (-3.0%)

Wednesday,

7 am weekly MBA mortgage applications

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

10 am January JOLTS job openings (8.9 million from 9.026 million)

Jerome Powell @ the House Financial Services Committee

2 pm Fed Beige Book

Thursday,

8:30 am weekly jobless claims (216K from 215)

Q4 final productivity and unit labor costs (productivity +3.1%, unit labor costs +0.7% from +0.5%)

10 am Jerome Powell @ the Senate Banking Committee

Friday,

8:30 am February employment data (unemployment rate 3.7% unch, NFP jobs +188K, private jobs +150K, labor participation 62.5% unch, average hourly earning month/month +0.3% from +0.6%, year/year 4.3% from 4.5%)

Source: TBWS

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