Markets expect high volatility with a week jam packed with data

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Published Date 6/3/2024

There will be key day throughout the week culminating on Friday with may employment data. May services and manufacturing indexes, ADP private jobs, weekly jobless claims, Q1 productivity and unit labor costs and April JOLTS job openings. Employment leads the parade, but other data also has focus.

Overseas, on Thursday the ECB is expected to lower its base lending rate 25 bps, the first cut since 2016. Europe’s inflation has been declining although May inflation surprised by increasing for the first time in a year, some market forecasters are thinking the EB will cut rates twice tis year. Ahead of the May US employment data on Friday, the ECB and President Lagarde will be watched closely.

At 9:30 am ET the DJIA opened +46, NASDAQ +118, S&P +19. 10 year at 4.47% -3 bps, the 2 year note 4.88% unch. FNMA 6.0 30 year coupon at 9:30 am +6 bps from Friday’s close and +3 bps from 9:30 am Friday.

At 9:45 am the Global PMI manufacturing index thought to be 50.9, reported at 51.3 and in line with most other nations showing manufacturing has increased. Eurozone's May Manufacturing PMI hit 47.3 (expected 47.4; last 45.7). Germany's May Manufacturing PMI hit 45.4, as expected (last 42.5).U.K.'s May Manufacturing PMI hit 51.2 (expected 51.3; last 49.1). France's May Manufacturing PMI hit 46.4 (expected 46.7; last 45.3). Italy's May Manufacturing PMI hit 45.6 (expected 47.9; last 47.3). Spain's May Manufacturing PMI hit 54.0 (expected 52.5; last 52.2). Swiss May procure.ch PMI hit 46.4 (expected 45.4; last 41.4).

At 10 am May ISM manufacturing was expected at 49.8 but dropped to 48.7. The reaction sent rates lower and MBS prices higher. At 9:30 am the 10 at 4.47%, at 10 am 4.42%.

Are consumers running out of spending? A key question for the economic outlook. Recent data from the Bureau of Economic analysis released a report indicating consumers disposable income is declining quickly. There is an increase in the use of credit cards as we have previously noted. On Friday April consumer credit is expected to have increased from +6.3B to $11.6B, where we focus is on the revolving credit amount. Credit card rates at very high levels while income increases are slowing down. The Fed and markets remained convinced though that the economy won’t recede.

This Week’s Economic Calendar:

Monday,

9:45 am PMI global manufacturing index (50.9 from 50.0 in April, as released the index increased to 51.3)

10 am May ISM manufacturing index (49.8 from 49.2, as reported 48.7)

April construction spending (+0.2%, as reported -0.1%)

Tuesday,

10 am JOLTS job openings (8.4 million from 8.488 million)

April factory orders (+0.7% from +1.6% in March)

Wednesday,

7 am weekly MBA mortgage applications)

8:15 am May ADP private jobs openings (173K from 192K in April)

9:45 am PMI global services index (54.8 from 51.3 in April)

10 am May ISM services index (50.7 from 49.4)

Thursday,

8:30 am weekly jobless claims (216K from 219K the previous week)

Q1 productivity and unit labor costs (productivity +0.2% from +0.3%, unit labor costs +4.7%)

April US trade deficit (-$75.2B from -$69.4B)

Friday,

8:30 am May employment data (unemployment rate 3.9% unch, NFP jobs +195K, private jobs +170K, labor participation rate 62.7% unch from April, month/month average hourly earnings +0.3% from +0.2%, year/year 3.9% unch from April)

3 pm April consumer credit ($11.6B from $6.3B in March)

Source: TBWS

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