The FOMC Meeting is the Big Story this Week, But First Republic Will Steal Headlines
In a week full of economic releases, the markets will be most obsessed with two events.
First, the FOMC meeting on May 2-3 is expected to result in the Fed raising the Fed Funds rate by 25 basis points. Market watchers will be looking for signs the FOMC will pause. This could be conveyed in the wording of the statement from the Fed at 2pm on May 3, or during the press conference, Fed Chair Powell is expected to hold at 2:30 on the same day.
Second, inflation information will also keep some investors on edge. A few vocal Fed governors continue to signal that they believe that wage growth and other non-housing inflation warrants continued vigilance. This makes the April Employment Report of particular concern. It is not expected to change the story about a strong labor market. There may be a few more signs of the imbalances in labor supply and demand resolving, but many businesses are still hiring, and relatively few are laying off workers.
Monday 5/1
• 9:45 AM ET, Purchasing Managers Index (PMI) for April is expected to come in at 50.4, unchanged from the mid-month flash to indicate marginal economic expansion relative to March.
• 10:00 AM, The ISM Manufacturing Index has been contracting during the last five months. April’s consensus is for slight growth of 46.8 versus March’s 46.3.
Tuesday 5/2
• 9:00 AM ET, The monetary policy-setting arm of the Federal Reserve will begin a two-day meeting that will end with an announcement of any adjustments to policy.
• 10:00 AM ET, Construction Spending for March is expected to have increased at a barely detectable .1% after falling .1% the previous month.
• 9:00 AM ET, Factory Orders is an important leading indicator of economic activity. The consensus forecast for March is a solid increase of 1.2%. This follows a decline the previous month of .7%.
Wednesday 5/3
• 10:00 AM ET, Institute for Supply Management (ISM) surveys non-manufacturing (or services) firms’ purchasing and supply executives. The services report measures business activity for the overall economy; above 50 indicates growth, while below 50 indicates contraction. The number for April is expected to be above 50 at 52%.
• 2:00 PM, the Fed statement following the FOMC meeting will be released.
• 2:30 PM, Fed Chair Jay Powell will answer questions on economic policy in a post FOMC meeting press conference.
Thursday 5/4
• 8:30 AM ET, Initial Jobless Claims for the week ended April 29 is expected to be higher at 240,000 than the prior week, where it stood at 230,000 individuals claiming unemployment.
Friday 5/5
• 8:30 PM ET, the U.S. Employment Report is chocked full of data that could cause a late-week shift in inflation expectations. The survey provides estimates for nonfarm payrolls, average weekly hours worked, and average hourly and weekly earnings. For April compared to March the economy is expected to have added 180,000 new jobs versus 236,000have an unemployment rate of 3.6% versus 3.5%, hourly wages are forecast to have a second month of increases averaging .3%, and an average year-over-year hourly wage increase equalling 4.2%.
What Else
There is more concern being created in the banking sector as the FDIC is said to be preparing to take First Republic Bank into receivership until they find a suitor. The bidding process among large banks is likely to be headline news before and after.
Managing Editor, Channelchek
