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.