May 5, 2022 Headlines

Markets are giving back some of yesterday’s post-FOMC move, which saw stocks surge 3% higher and front-end Treasury yields fall 13-15 basis points. The dovish market response was mostly attributable to Jerome Powell effectively dismissing a 75 bps rate hike as a possibility at future meetings, which eased some concerns that the Fed had shifted into an even more hawkish position in recent weeks. As one rates strategist noted this morning, the market reaction yesterday was more about positioning than substance from the Fed, which makes reasonable sense given the growth in short positions in recent weeks, particularly in Treasuries. The pace of balance sheet reduction was largely in line with expectations, but a somewhat delayed start (June 1) and no mention of asset sales fueled strong outperformance for Agency MBS relative to Treasuries yesterday afternoon.
While there was considerable focus on the “not actively considering” 75 bps rate hikes comment, the rest of Powell’s comments (and the official statement) shouldn’t be characterized as dovish. He emphasized that there will be no hesitation to move into restrictive policy territory if needed, and he also acknowledged (correctly) that neither high inflation or higher rates to combat inflation are pleasant scenarios for consumers and businesses. Focus now shifts to tomorrow’s jobs report for April.

Jason Haley
Chief Investment Officer

Date	Event	Surv(M)	Actual	Prior	Revised
05/02/22	S&P Global US Manufacturing PMI	59.7	59.2	59.7	—
05/02/22	Construction Spending MoM	0.80%	0.10%	0.50%	—
05/02/22	ISM Manufacturing	57.6	55.4	57.1	—
05/02/22	ISM Prices Paid	87.4	84.6	87.1	—
05/02/22	ISM New Orders	54.1	53.5	53.8	—
05/02/22	ISM Employment	55	50.9	56.3	—
05/03/22	Factory Orders	1.20%	2.20%	-0.50%	0.10%
05/03/22	Factory Orders Ex Trans	—	2.50%	0.40%	1.00%
05/03/22	Durable Goods Orders	0.80%	1.10%	0.80%	—
05/03/22	Durables Ex Transportation	1.10%	1.40%	1.10%	—
05/03/22	Cap Goods Orders Nondef Ex Air	1.00%	1.30%	1.00%	—
05/03/22	Cap Goods Ship Nondef Ex Air	—	0.40%	0.20%	—
05/03/22	JOLTS Job Openings	11200k	11549k	11266k	11344k
05/03/22	Wards Total Vehicle Sales	14.15m	14.29m	13.33m	—
05/04/22	MBA Mortgage Applications	—	2.50%	-8.30%	—
05/04/22	ADP Employment Change	383k	247k	455k	479k
05/04/22	Trade Balance	-$107.1b	-$109.8b	-$89.2b	-$89.8b
05/04/22	S&P Global US Services PMI	54.7	55.6	54.7	—
05/04/22	S&P Global US Composite PMI	55.1	56	55.1	—
05/04/22	ISM Services Index	58.5	57.1	58.3	—
05/04/22	FOMC Rate Decision (Upper Bound)	1.00%	1.00%	0.50%	—
05/04/22	FOMC Rate Decision (Lower Bound)	0.75%	0.75%	0.25%	—
05/04/22	Interest on Reserve Balances Rate	0.90%	0.90%	0.40%	—
05/05/22	Challenger Job Cuts YoY	—	6.00%	-30.10%	—
05/05/22	Nonfarm Productivity	-5.30%	-7.50%	6.60%	6.30%
05/05/22	Unit Labor Costs	10.00%	11.60%	0.90%	1.00%
05/05/22	Initial Jobless Claims	180k	200k	180k	181k
05/05/22	Continuing Claims	1400k	1384k	1408k	1403k
05/06/22	Two-Month Payroll Net Revision	—	—	95k	—
05/06/22	Change in Nonfarm Payrolls	380k	—	431k	—
05/06/22	Change in Private Payrolls	390k	—	426k	—
05/06/22	Change in Manufact. Payrolls	35k	—	38k	—
05/06/22	Unemployment Rate	3.50%	—	3.60%	—
05/06/22	Average Hourly Earnings MoM	0.40%	—	0.40%	—
05/06/22	Average Hourly Earnings YoY	5.50%	—	5.60%	—
05/06/22	Average Weekly Hours All Employees	34.7	—	34.6	—
05/06/22	Labor Force Participation Rate	62.50%	—	62.40%	—
05/06/22	Underemployment Rate	—	—	6.90%	—
05/06/22	Consumer Credit	$25.000b	—	$41.820b	—

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