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 | — |
Subscribe Today!
Subscribe to our email list and get the latest articles and announcements from ALM First.