MrTopStep’s Index Futures Recap – Monday May 5th
With the Fed undecided on a June rate increase, we believe the outcome will depend on Fed commentary for a repricing of rate expectations to occur in the coming weeks. Indeed, the market response to the constructive Q1 GDP release was muted on the back of a cautious Fed.Additional incoming data, however, will be the key driver of any upgrade to Fed rhetoric. Fed officials want to see more evidence that the Q1 slowdown was temporary, with growth set to reaccelerate in the second quarter on the back of robust consumer fundamentals (real income and sentiment) and continued strength in labour market conditions, as stressed in the April FOMC statement. The heavy data flow in the week ahead centres on the April jobs report for further support to this view. We expect April nonfarm payrolls to rise by 190K vs. 215K in March…The April unemployment rate may decline marginally but is likely round to 5.0% rather than 4.9% Given a sustained recovery in global financial conditions, we expect the data to come in stronger and Fed commentary to sound more constructive. But, until then, the USD should continue to struggle, particularly against commodity currencies.
Elsewhere in the report, we forecast average hourly earnings to rise 0.3% m/m and 2.4% y/y in April. In line with our view that US labor markets remain healthy, we expect the average workweek to hold steady at 34.5 hours.
We look for the household survey to show a similar pace of job growth as the establishment survey, leading the unemployment rate to decline one-tenth, to 4.9%. Striking workers are generally included in the household survey under the category “with a job, but not at work.” Labor force participation has risen 0.6pp since September, limiting the magnitude of the decline in the unemployment rate. We expect participation to trend broadly sideways from its current reading of 63.0% and look for the near-term evolution of the unemployment to reflect employment gains more closely.
Floor Pivots For Tomorrow’s RTH E-mini
Tomorrow’s Notable Earnings: Avis Budget Group Inc (CAR), Brinks Co (BCO), CBS Corp (CBS), Cineplex Inc (CGX), Clorox Co (CLX), Cummins Inc (CMI), CVS Health Corp (CVS), Duke Energy Corp (DUK), Estee Lauder Companies Inc (EL), Fresh Del Monte Produce (FDP), Hyatt Hotels Corp (H), New York Times Co (NYT), Nutrisystem Inc (NTRI), Papa John’s International, Inc. (PZZA), Pfizer Inc (PFE), Scotts Miracle-Gro Co (SMG), Sprint Corp (S),, Zillow Group Inc (ZG)
Tomorrow’s Economic Calendar:
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8:55 AM ET
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<li>Open: 2065.00 </li>
<li>High 2077.50 </li>0
<li>Low: 2059.50 </li>
<li>Close: 2074.5 </li>
<li>Volume: 1.3 million total </li>
<li>MOC: $100 Million to Buy </li>