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We’re starting off slowly this week in terms of economic reports, but we’ll end with a bang Friday with the Employment Situation report: nonfarm payrolls and the Unemployment Rate. For this, we find ourselves in the curious position of hoping for much lower monthly jobs totals: 225K expected, barely more than half of thew surprise 517K reported for January. Unemployment is expected to remain at 3.4%, 50-year lows, same as the previous month.
Leading up to this key set of data points, Wednesday brings us ADP (ADP - Free Report) private-sector payrolls, along with a new JOLTS report, Trade Balance and Beige Book. Private-sector payrolls last month came in far lower than nonfarm payrolls: 106K versus 517K. It’s likely we’ll see some noteworthy revisions in one or both of these metrics. Thursday morning, as always, we’ll see Weekly Jobless Claims, which have also proven very resilient in recent weeks.
Perhaps even bigger than these reports, Employment aside, is the expected commentary this week from Fed Chair Jay Powell both Tuesday and Wednesday, along with San Francisco Fed President Mary Daly and Fed Governor Chris Waller. We’re still two weeks away from the next Federal Open Market Committee (FOMC) meeting, but these will be some of the final comments about the direction the Fed is pointing ahead of the blackout period the Saturday prior to the meeting.
Mary Daly has, in fact, already addressed a crown at Princeton over the weekend, where she said, rather guileless, that “further policy tightening, maintained for a longer time, will likely be necessary.” This is not a tacit endorsement of a 50 bps hike at the next meeting, but it doesn’t put the notion to bed, either. We’re still leaning toward 25 bps at the March 22nd meeting, again on May 3rd and possibly on June 14th. Jobs and CPI data are probably the biggest potential game changers from this idea.
The facts remain, however: there is still plenty of data pointing toward a recession in our future. We’ve spent nearly a full year with an inverted 2-year/10-year yield curve — and at -90 bps, pretty much the widest margin of inversion we’ve yet seen — and inflation is keeping hotter than wage growth to this point, with productivity flagging in certain markets. These are all conditions keeping the Fed “honest,” and their decisions continually precarious.
Pre-market futures are up across the three top indices: the Dow is currently +20 points, the S&P 500 is +8 and the Nasdaq +45 points. We’re up over the past week of trading, down over the past month. But January was stronger than February was weak, so year to date we’re still +0.45% on the Dow for 2023 so far, +5.5% on the S&P, +9.8% on the small-cap Russell 2000 and +12.9% on the tech-heavy Nasdaq.
Image: Bigstock
Starting Off Slow for Jobs Week
Monday, March 6th, 2023
We’re starting off slowly this week in terms of economic reports, but we’ll end with a bang Friday with the Employment Situation report: nonfarm payrolls and the Unemployment Rate. For this, we find ourselves in the curious position of hoping for much lower monthly jobs totals: 225K expected, barely more than half of thew surprise 517K reported for January. Unemployment is expected to remain at 3.4%, 50-year lows, same as the previous month.
Leading up to this key set of data points, Wednesday brings us ADP (ADP - Free Report) private-sector payrolls, along with a new JOLTS report, Trade Balance and Beige Book. Private-sector payrolls last month came in far lower than nonfarm payrolls: 106K versus 517K. It’s likely we’ll see some noteworthy revisions in one or both of these metrics. Thursday morning, as always, we’ll see Weekly Jobless Claims, which have also proven very resilient in recent weeks.
Perhaps even bigger than these reports, Employment aside, is the expected commentary this week from Fed Chair Jay Powell both Tuesday and Wednesday, along with San Francisco Fed President Mary Daly and Fed Governor Chris Waller. We’re still two weeks away from the next Federal Open Market Committee (FOMC) meeting, but these will be some of the final comments about the direction the Fed is pointing ahead of the blackout period the Saturday prior to the meeting.
Mary Daly has, in fact, already addressed a crown at Princeton over the weekend, where she said, rather guileless, that “further policy tightening, maintained for a longer time, will likely be necessary.” This is not a tacit endorsement of a 50 bps hike at the next meeting, but it doesn’t put the notion to bed, either. We’re still leaning toward 25 bps at the March 22nd meeting, again on May 3rd and possibly on June 14th. Jobs and CPI data are probably the biggest potential game changers from this idea.
The facts remain, however: there is still plenty of data pointing toward a recession in our future. We’ve spent nearly a full year with an inverted 2-year/10-year yield curve — and at -90 bps, pretty much the widest margin of inversion we’ve yet seen — and inflation is keeping hotter than wage growth to this point, with productivity flagging in certain markets. These are all conditions keeping the Fed “honest,” and their decisions continually precarious.
Pre-market futures are up across the three top indices: the Dow is currently +20 points, the S&P 500 is +8 and the Nasdaq +45 points. We’re up over the past week of trading, down over the past month. But January was stronger than February was weak, so year to date we’re still +0.45% on the Dow for 2023 so far, +5.5% on the S&P, +9.8% on the small-cap Russell 2000 and +12.9% on the tech-heavy Nasdaq.
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