Markets will focus on FOMC and jobs data this week

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Published Date 7/29/2024

Inflation dipped in June as was expected, rates declined, but the 10 year note on Friday still wouldn’t drop below 4.20% where it closed. This morning more follow-through, the 10 traded at 4.16% at 8 am ET. This week’s calendar is full, two headliners, FOMC and July employment but there are a few other keys, JOLTS job openings, consumer confidence, Q2 productivity and unit labor costs.

Inflation slowed in June with Friday’s PCE data. For the past two months talk of rate cuts has been continual, some thinking one cut, some say two and still a few talking three cuts. Powell weighing the risks of cutting rates too soon and waiting too long, in favor of acting sooner. The fist cut will occur at the September FOMC meeting, whether there will be more will be based on future inflation news, look for the policy statement from the FOMC and Powell’s press conference to stress more inflation data will need to be examined. Employment and the economic outlook also key. Friday’s University of Michigan consumer sentiment still weakening, tomorrow July consumer confidence index expected to weaken also, and the June JOLTS job openings forecast is for continued decline.

At 9:30 am the DJIA began +26 after +654 on Friday, NASDAQ +77 from +176 Friday, S&P +11 from +60 on Friday. 10 year note at 4.16% -4 bps from -5 on Friday. FNMA 6.0 30 year coupon at 9:30 am +10 bps from Friday’s close and +11 bp from 9:30 am Friday.

The 10 yield this morning has yet to achieve a new low in July, at 4.16%. Friday’s inflation slowing couldn’t take the 10 year note below 4.2%, the level we have been referring to recently. This morning at 4.16% holding the knee jerk drop below 4.20% 10 days ago that lasted less than 24 hours before moving back into its range.

From 9:30 am to 10 am the 10 year note went from 4.16% to 4.18%, MBS from +10 to +6. The present level for rates must have more incentive to decline lower, won’t get that until at least Wednesday afternoon.

This Week’s Economic Calendar:

Tuesday,

9 am May Case/Shiller home price index (month/month +0.5%)

May FHFA home price index (month/month +0.3%)

10 am July Consumer confidence index (99.5 from 100.4 in June)

June JOLTS job openings (8.0 million from 8.14 million in May)

FOMC meeting kicks off

Wednesday,

7 am MBA mortgage applications

8:15 am July ADP private jobs (+154K from 150K in June)

8:30 am Q2 employment cost index (+1.0% from +1.2% in Q1)

9:45 am July Chicago purchasing managers index (44.3 from 47.4)

10 am June pending home sales (+1.1% from -2.1% in May)

2 pm FOMC policy statement

2:30 pm Jerome Powell’s press conference

Thursday,

8:30 am Weekly jobless claims (236K from 235K)

Q2 preliminary productivity and unit labor costs (productivity +1.6% annually from +0.2% in Q1; unit labor costs +1.9% from +4.0% in Q1)

9:45 am July PMI manufacturing index (49.5 from 51.6 in June)

10 am July ISM manufacturing index (48.8 from 48.5 in June)

June construction spending (+0.2% month/month from -0.1% in May)

Friday,

8:30 am July employment report (unemployment 4.1% unch from June, NFP jobs +180K, private jobs +155K, avg hourly earnings +0.3% unch from June, labor participation rate 62.6% unch from June)

10 am June Factory orders (-3.0%)

Source: TBWS

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