Markets will have plenty of data this week despite the Fourth of July holiday

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Published Date 7/1/2024

Last week the 10 year note declined to 4.20%, the lowest level since April. Traders turned sour on the technical failure and on constant Fed comments that a rate cut is questionable this year with inflation still holding firm, in the meantime other major central banks are moving ahead with cuts as inflation is slowing in Europe and other major countries. In an article from Bloomberg this morning, among the world’s top 23 central banks only the Bank of Japan isn’t likely to cut rates. The Fed however is still perceived to cut rates twice this year.

The outlook for rate cuts is the constant headline, some Fed officials still talk about a cut, others talking an increase. The reality is no one at the Fed has much confidence in their outlooks. Tomorrow Jerome Powell is attending an ECB banking summit. Will he change his tone, or hold the line he has espoused since the last FOMC meeting and his press conference? Rate markets remain schizophrenic.

Inflation data released on Friday was in line with estimates, a little better but not much. Selling of treasuries heated up mainly on technical issues.

This morning the 10 year note began at 4.44% +5 bps, MBS prices were down 12 bps from Friday at 8:30 am ET, the highest since June 6th.

The BLS held steady, unwilling to delay June employment data for a week keeping markets open on Friday. The norm for the BLS is to delay the release if the first Friday is after a holiday, other than that it is always the first Friday.

At 9:30 am the DJIA opened +116, NASDAQ +44, S&P +14. 10 year at 9:30 am 4.45% +5 bps. FNMA 6.0 30 year coupon at 9:30 am -24 bps from Friday’s close and -42 bp from 9:30 am Friday; the 6.5 coupon -16 bps from Friday and -40 bps from 9:30 am Friday.

At 9:45 am June PMI manufacturing index, expected at 51.7, reported at 51.6.

At 10 am June ISM manufacturing index expected at 49.1; reported 48.5.

The 10 year note trading above its 20, 40 and 200 day averages, above 50 on the 9-day RSI index.

This Week’s Economic Calendar:

Monday,

9:45 am June PMI manufacturing index (51.7 from 51.3) reported 51.6

10 am June ISM manufacturing index (49.1 from 48.7) reported 48.5

May construction spending (+0.3% from -0.1%) reported -0.1%

Tuesday,

9:30 am Jerome Powell at the ECB banking conference

10 am May JOLTS job openings (7.9 million from 8.059 million)

Wednesday,

7 am weekly MBA mortgage applications

8:15 am June ADP (private jobs (163K from 162K)

8:30 am weekly jobless claims (235K from 233K)

9:45 am June PMI services index (55.1 from 54.8 in May)

10 am June ISM services sector index (53.0 from 53.8)

May factory orders (+0.3% from +0.7%)

Thursday,

4th of July

Friday,

8:30 am June employment data (unemployment rate 0.4% unch, NFP jobs +189K from 272K, private jobs +160K from 229K, average hourly earnings +0.3% from +0.4%, year/year hourly earnings +3.9% from 4.1%)

Source: TBWS

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