Jobs data for the month of May released last Friday offered mixed signals to the economy giving way to falling U.S. Treasuries yields and inversely the S&P 500 reaching new highs. The decline in the official unemployment rate to 4.3%, the lowest during the past 16 years, was partly due to a drop in the size of the labor force. The three-month average of payroll gains reached the weakest levels since 2012. It is likely that the slowdown in the creation of new jobs and average wage growth is due to a lack of qualified and skilled labor availability combined with political uncertainty.
Market participants believe that the jobs data will have minimal impact on the probability of the Fed hiking rates at its June meeting next Tuesday, though expectations for the pace of rate hikes have slowed.
The 10-year Treasury fell six basis points to 2.148% on Friday, the lowest level of the year. Conversely, the S&P 500 climbed .03% on the week to reach a record high of 2,438.38.
Overall volumes this morning was light with much of Europe on holiday in observance of Whit Monday. This week’s economic data calendar will primarily be that of tier 2 and tier 3 releases.
- Economic Indicators: Factory Orders, ISM data (Monday), MBA mortgage applications, consumer data (Thursday).
- The American Petroleum Institute to publish its weekly report on U.S. oil supplies 9wednesday) and the U.S. Energy Information Administration is to release weekly data on oil and gasoline stockpiles (Thursday)
Perhaps more important will be former FBI Director Comey’s testimony to the Senate regarding the investigation on Russia’s involvement during the 2016 US Presidential election.
Overseas, there will be two major central bank meetings this week. The Reserve Bank of Australia meets early Tuesday morning (12:30 am EST) and will be followed by the European Central Bank on Thursday at 7:45 am EST. Neither central bank is expected to alter their target rates or existing quantitative programs. Additionally, the United Kingdom will hold its general election on Thursday with the big question being whether Prime Minister Theresa May’s Conservative party will get the majority in Parliament.
