What Happened Last Week?
Decent Recovery After Friday’s PCE Numbers Clarify Thursday’s PCE Numbers
Thursday’s quarterly PCE numbers were much higher than expected. That meant an increased risk that Friday’s monthly numbers would follow suit. While Friday’s PCE was higher than expected in places, the important month-over-month core PCE was in line with expectations (but only because last month was revised higher). In short, inflation is still higher than the Fed wants it and higher than the market expected, but not quite as high as yesterday’s report suggested–at least not for the month of March (January and February, however, were even higher than the market previously traded). There was a moderately good rally after the data and then a sideways grind in the PM hours with yields remaining higher than they were before all this fun began on Thursday morning.
Source: Matthew Graham, Mortgage News Daily 4/26/2024)
What’s on the Agenda for This Week?
Three Things
The three areas that have the greatest ability to impact MBS backend pricing this week are: (1) The Talking Fed, (2) Jobs, Jobs, Jobs and (3) Rosie the Riveter.
(1) The Talking Fed: The Fed’s latest Interest Rate Decision and Policy Statement will be on Wednesday. While the markets are not pricing in any rate change at this meeting, experts will be keen to see if the tone of the FOMC statement and Fed Chair Powell’s live presser is more “hawkish.” This is not one of their meetings where they release their Economic Projections.
(2) Jobs, Jobs, Jobs: The week will end with Big Jobs Friday but will have lots of job and wage related data all week long with Employment Cost Index, ADP, JOLTS, Challenger Job Cuts, Initial Weekly Jobless Claims, Unit Labor Costs, Non-Farm Payrolls, Unemployment Rate, Average Hourly Earnings.
(3) Rosie the Riveter: The bellwether Chicago PMI and the national ISM Manufacturing and ISM Services will be this week. All will be closely watched.
Market Wrap-up
Domestic Flavor
Rosie the Riveter: The April Dallas Fed Manufacturing Survey dropped to -14.5 versus estimates of -11.3.
On Deck For Tomorrow: Treasury ReFunding Announcement, Employment Cost Index, Case Shiller and FHFA Home Prices Indexes, Chicago PMI and Consumer Confidence.