UPCOMING EVENTS:
Monday: US Memorial Day.
Wednesday: US Job Openings.
Thursday: Eurozone CPI, US Jobless Claims , ISM Manufacturing PMI.
Friday: US NFP.
Wednesday: Recently US Job Openings missed expectations and caused a dovish reaction in the markets. The market now is very sensitive to jobs data because a looser labour market is what is needed to bring inflation back to the Fed’s 2% target. There’s also the so-called “wealth effect” that may keep the labour market strong as long as the equity market keeps rising. The forecast sees Job Openings at 9,775M vs. 9,590M prior. Below you can see how the S&P500 leads US Job Openings.
Thursday: The Eurozone headline CPI Y/Y is expected lower at 6.3% vs. 7.0% prior, while the Core Y/Y is seen at 5.5% vs. 5.6% prior. The market will be more focused on the Core readings as base effects and lower energy prices skew the headline numbers. The ECB is expected to hike by 25 bps at the next meeting.
The US Jobless Claims have been a market mover lately as the market was trying to see if the mid-March banking woes impacted the labour market. Although we got a pickup in claims for a month or so, the uptrend started to reverse, and we are now back at the previous lows. From now on, this report should be market moving only if we get big misses. Initial Claims are expected at 235K vs. 229K prior, while Continuing Claims are seen at 1,800K vs 1,794K prior.
The ISM Manufacturing PMI is expected at 47.0 vs 47.1 prior. There’s a global divergence going on between the manufacturing sector contracting and the services sector expanding. The S&P Global PMIs recently showed a bigger than expected contraction for the manufacturing sector so the sentiment going into this ISM report is skewed to the downside.
Friday: The expectation for the NFP is 180K jobs added vs. the prior 253K. The unemployment rate is seen up a little to 3.5% vs 3.4% prior, while the Average Hourly Earnings M/M are expected to ease to 0.3% vs. 0.5% prior. The last NFP report beat expectations across the board and especially the rise in Average Hourly Earnings caused a hawkish repricing in interest rate expectations. Given the still high inflation rate and tight labour market, the focus should be on the AHE numbers.
This article was written by Giuseppe Dellamotta.
