By Theresa Sheehan
PRINCETON (SMRA) – The week ahead has a steady flow of economic
data releases, but it is the April employment report that will be the
focus. Three major central banks will make their respective monetary
policy announcements.
Economic Data
Although the data release calendar is fairly busy over the course
of the week, not much will distract from employment report for April on
Friday at 8:30 ET.
Currently market expectations are for a rise in nonfarm payrolls of
about 200,000, in line with the last two months. The unemployment rate
is anticipated to be about the same at 8.8%. This would be consistent
with an improvement in labor market conditions, although with a long way
to go. Still, it would be more evidence of a sustained recovery for
jobs.
The only data likely to result in any last-minute adjustment to
analysts’ outlooks for employment is the ADP National Employment Report
at 8:15 ET on Wednesday. The report has matched up fairly closely to the
change in payrolls for the last two months, and there does not appear to
be any special factors that might throw that off for the April data.
Other labor market-specific reports are the Challenger numbers on
layoff intentions in April at 7:30 ET on Wednesday and the Monster.com
Employment Index for April which will be released in the early hours of
Thursday.
Initial claims levels for the week ended April 30 will be reported
at 8:30 ET on Thursday. Recent weeks have shown an uptick in claims, but
this should fade as the data gets past the difficulties in seasonally
adjusting the data related to the timing of the Easter holiday.
Also feeding into expectations for the employment numbers are the
number of employees components in the reports from the ISM on
manufacturing and non-manufacturing activity. Regional numbers for the
factory sector in April indicate that manufacturing payrolls are on the
rise. The outlook for the service sector is less clear.
In any case, the ISM releases its manufacturing index at 10:00 ET
on Monday, and the non-manufacturing index at 10:00 ET on Wednesday.
Both are expected to show continued expansion in their respective
sectors, and be further evidence that the economic recovery is being
sustained at a modest pace.
The April numbers on sales of domestically produced motor vehicles
will be released as available on Tuesday, and the monthly same-store
sales comparisons will be out on Thursday. Overall, consumer spending
should show some gains after a cooling in March. Higher prices for
gasoline will benefit sales of smaller passenger cars, while those in
the light truck category will be less attractive to purchasers. Measures
of retail sales for fiscal April should get a boost from softer activity
in April 2010, in part due to the timing of the Easter holiday early in
the month.
The remaining data on the economic release calendar will probably
get a quick look and then markets will refocus on the upcoming
employment report. On Monday at 10:00 ET, the March data on construction
spending will provide some new information for public sector building
and projects, and confirm what is already known about residential
activity plus spending on residential renovations. On Tuesday at 10:00
ET, the data on new orders for factory goods in March should follow the
lead of the 2.5% rise in durables orders reported on April 27. Increases
in energy costs should mean a rise for nondurables orders. The
preliminary numbers for productivity and unit labor costs in the first
quarter at 8:30 ET Thursday will be consistent with the already reported
GDP data which showed a lackluster 1.8% rise.
Changes in consumer credit in March at 15:00 ET on Friday will be
overshadowed by the employment numbers in the morning. However, it
should reflect slower growth in auto loans and restrained use of
revolving consumer credit.
If the usual release pattern is followed, we expect the Fed to
publish the Senior Loan Officer Opinion Survey for April at 14:00 ET on
Monday. The last couple of issues have indicated that credit conditions
continue to mend, and that activity for C&I lending is nearer normal
functioning. There continued to be hurdles for lending to households,
particularly in obtaining mortgages.
Central Bank Activity and Federal Reserve Speakers
Next week routine monetary policy statements are expected from the
Reserve Bank of Australia, the Bank of England, and the ECB.
The Reserve Bank of Australia’s announcement will be published in
the US during the early morning hours of Tuesday. While the Bank’s most
recent statements have placed policy on hold, the news of a surprising
uptick in inflation during the first quarter may return the Bank to a
tightening bias.
The Bank of England’s Monetary Policy Committee holds a two-day
session on Wednesday and Thursday. Its decision is expected around 7:00
ET on Thursday. The Bank probably will not hike rates yet, or reduce the
size of its Asset Purchase Program, but it is leaning more in that
direction.
The ECB increased rates by 25 basis points at its last meeting on
April 7, but no further hikes are expected at the Thursday meeting. The
announcement should be released around 7:45 ET.
After the end of the traditional press blackout period that
surrounds an FOMC meeting, Fed policymakers will be making public
comments again. There probably will be no real surprises in any of the
speeches to be given.
We note that San Francisco Fed President John Williams will give
his first public remarks about policy on Wednesday. FOMC voter and
President of the Minneapolis Fed Narayana Kocherlakota will specifically
address monetary policy in his comments on Thursday. Chairman Ben
Bernanke will be at the Chicago Fed’s Annual Conference on Bank
Structure and Competition. We anticipate his remarks will be more about
regulation than monetary policy.
Treasury Auctions
The U.S. Treasury will release the details of the quarterly
refunding package to on Wednesday, May 4 at 9:00 ET. At that time the
Treasury may update the expected deadline for reaching the statutory
debt limit. Depending on the date, there may be some contingencies
announced for alterations in the Treasury auction calendar should the
debt limit not be raised in time. The new 3- and 10-year notes, and
30-year bonds will be auctioned on the following Tuesday through
Thursday, May 10-12. All will settle on Monday, May 16.
Borrowing requirements will be announced on Monday, May 2 at 15:00
ET.
First Quarter Earnings Season
The flood of earnings reports continues. While all types of
companies are reporting their first quarter results, some of the major
sectors in this coming week will be automakers, oil companies,
utilities, manufacturing, consumer products and services, and media
outlets. Standouts are likely to include:
Monday – Anadarko Petroleum, Audi, ADP, Chesapeake Energy, Delphi
Energy, Dole Food, Humana, Hyundai, Samsung Heavy Industries, Sothebys,
and Warner Music Group.
Tuesday – Archer Daniels Midland, Comcast, Duke Energy, Emerson
Electric, Hyatt Hotels, Marathon Oil, Mastercard, Pfizer, Clorox, Unum
Group, and Viacon.
Wednesday – Allergan, Anheuser Busch Inbev, BMW, Kellog, Metlife,
MGM Resorts, NewsCorp, Siemens, and Time Warner.
Thursday – Airgas, Cigna, CVS Caremark, Ing Groep, Kraft Foods,
Orbitz, Priceline.com, Sara Lee, Scripps Networks, and Visa.
Friday – Booz Allen Hamilton Holdings, US Energy, and the
Washington Post Companies.
** Market News International Washington Bureau: 202-371-2121 **
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