Data this week should continue to demonstrate a stronger pace of recovery in the US – due in part to the substantial stimulus support and the vaccine rollout. The key data highlights are US Non-Farm Payrolls and the US ISM PMI’s. Global Markit PMI’s will also be in focus – especially as other major economies progress on vaccine rollouts. There are also several central bank decisions (RBA and BoE) this week.
Last week, the FOMC kept policy settings unchanged, continuing to signal no change in policy until substantial further progress is made on the recovery. The US labour market is the core focus of the FOMC. Non-Farm Payrolls will be released this week for Apr and the expectations are for another significant increase of 986k payrolls (+916k in Mar). A reduction in the unemployment rate is also expected in the household survey. One other important indicator will be the participation rate. Participation has only partially recovered. Given stimulus and progress on vaccinations, increases in participation will be a positive indicator of a reduction in labour market slack (especially if the unemployment rate also decreases).
The US ISM surveys will be released this week, along with the global Markit PMI’s. More attention will focus on the performance of the services sector (re-opening progress), and prices paid versus the prices received indexes within the surveys.
Other data out for the US: the ADP employment report is released on Wed ahead of the Fri Non-Farm Payrolls, Factory Orders, Consumer Credit, and Motor Vehicle Sales (Apr).
There will also be a speech by US Fed Chair Powell on Monday.
There will be several central bank decisions this week – the RBA and the BoE.
In Australia, housing finance, building approvals, and the RBA Quarterly Policy Statement will be released this week. The Aus Federal Budget will be released next Tue 11 May and further policy details will be released in the lead up to the budget night. The budget is expected to reverse the pre-pandemic stance on “budget repair” and austerity.
QE purchases this week: The US Federal Reserve will purchase approx. $17.8bn in US Treasury securities this week (last week approx. $18.2bn). The US Fed will also purchase approx. $31.5bn in MBS this week (last week $29.6bn).
US Treasury issuance will be lighter this week. The US Treasury will settle approx. $266bn in ST Bills this week, with a $39bn paydown.
This week, approx. $22bn in ST Bills mature on the Fed balance sheet and will be rolled over.
The latest Q2 and Q3 US Treasury financing requirements will be announced this week on 5 May.
More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
