March Jobs Report Not Likely to Move Markets

  • To the surprise of nobody who’s been paying attention, the feel good news around peace talks yesterday has dissipated today as Russian military activity suggests no real pull back, but rather a feint to buy some time. The markets want to believe the good news stories, but Putin’s objectives for Ukraine remain, so we would fade any market moves off supposed good news from “peace talks” for the time being.

 

  • That reality has most markets on the back foot today with yields a bit higher, and predictably, oil and gas prices are higher too off the latest news.

 

  • Meanwhile, we came into the week wanting to get a better read on the consumer and whether flagging confidence finally starts to impact their spending patterns. To date, while confidence readings have been retreating in the face of higher prices and the geopolitical situation, consumer spending has held in pretty well.

 

  • Yesterday’s Conference Board Confidence Reading came in slightly better than expected, and better than the prior month, but that was only because February’s reading was revised lower. Also, consumer expectations were the lowest in eight years, so a mixed reading at best on the consumer.

 

  • Tomorrow will give us the Personal Income and Spending for February and we’ll have an eye on the spending piece. Expectations are for spending, inflation-adjusted, to be up 0.5% vs. a 2.1% increase in January. The monthly number can be volatile but a miss to the downside might signal some caution creeping into the consumer. The other piece of the report that will get investor attention is the inflation numbers. The Core PCE (the Fed’s favorite) is expected to climb again from 5.2%YoY  to 5.5%YoY. That would be the highest since 1983 and certainly bolster the case for a 50bps rate hike at the May FOMC meeting.

 

  • The employment report due on Friday is not likely to alter the Fed’s rate-hiking plans, nor alter the current trading environment in Treasuries. Today’s ADP Employment Change report was nearly spot-on to expectations with 455k new jobs vs. 450k forecast. That sets the stage for Friday’s jobs report which is expected to reveal 490k new jobs vs. 678k in February. If it comes anywhere close to expectations the market is likely to shrug and move on to other concerns.

 

Conference Board’s Consumer Expectations (Lowest in Eight Years)

 

Agency Indications — FNMA / FHLMC Callable Rates

Maturity (yrs) 2 Year 3 Year 4 Year 5 Year 10 Year 15 Year
0.25 2.35 2.59 2.65 2.76 2.92 3.38
0.50 2.34 2.56 2.59 2.65 2.78 3.27
1.00 2.33 2.53 2.56 2.61 2.69 3.14
2.00 2.52 2.50 2.53 2.57 NA
3.00 2.48 2.51 NA
4.00 2.46 NA
5.00 2.42 NA
10.00 NA

Securities offered through the SouthState Bank Correspondent Division ("SouthState") 1) are not FDIC insured, 2) not guaranteed by any bank, and 3) may lose value including a possible loss of principal invested. SouthState does not provide legal or tax advice. Recipients should consult with their own legal or tax professionals prior to making any decision with a legal or tax consequence. The information contained in the summary was obtained from various sources that SouthState believes to be reliable, but we do not guarantee its accuracy or completeness. The information contained in the summary speaks only to the dates shown and is subject to change with notice. This summary is for informational purposes only and is not intended to provide a recommendation with respect to any security. In addition, this summary does not take into account the financial position or investment objectives of any specific investor. This is not an offer to sell or buy any securities product, nor should it be construed as investment advice or investment recommendations.

Tags: Published: 03/30/22 by Thomas R. Fitzgerald