Key Events In The Coming Busy Week: Payrolls; FOMC Minutes; Trump Meets Xi

The key economic releases in the US this week are ISM manufacturing on Monday, ISM non-manufacturing on Wednesday, and the employment report on Friday. The minutes of the March FOMC meeting will be released on Wednesday. In addition, there are several scheduled speaking engagements by Fed officials this week. Consensus expected 175K jobs to be added at Friday's US Nonfarm payrolls. Additionally, there will be updates on Eurozone industrial production data, a series of ECB speakers and the French election TV debate. In EM, there are monetary policy meetings in India, Israel, Peru, Poland and Romania as well as a series of rating reviews.

Market participants will also be paying attention to the meeting between Trump and Xi set for Thursday and Friday at Mar-A-Lago.

The US non-farm payrolls take center stage

Economists think nonfarm payrolls grew by 175,000 in March, implying another strong month of job gains. Incoming data on the labor market in March have been positive: regional business surveys such as the Empire State and Philly Fed surveys suggest hiring activity picked up. Moreover, the labor market differential index from the Conference Board's consumer confidence report surged to 12 in March marking the highest reading since August 2001. Overall, while the risks to the forecast are balanced analysts don't believe an upside surprise has the potential to influence June rate hike pricing given the French elections.

Fed and ECB minutes to also gather attention

Also on this week's docket will be the March FOMC minutes where the balance of risks is skewed towards a more hawkish interpretation by the market - in potential contrast to the March FOMC dovish reaction to the lower than expected Fed dots path.  The ECB also releases its March meeting minutes where the market will try to get more insight over the precise points of dispute between hawks and doves concerning monetary policy tightening and the sequencing of instruments. Given the re-pricing of forwards following hike expectations pushback over the last week and the permanence of 5y premia pricing, there is limited scope for a drop in front-end rates.

Emerging Markets

There will be monetary policy meetings in India, Israel, Peru, Poland and Romania. Rating reviews in Belarus, Czech Republic, Morocco, Romania, Saudi Arabia and South Africa.

Summary of key weekly data

  • In the US beyond FOMC minutes and NFPs, we get ISM manufacturing, construction spending and trade balance.
  • In the Eurozone, we have German industrial production and Eurozone retail sales & unemployment. We also note ECB's Draghi, Constancio, Coeure and Praet are to speak. Finally, we also highlight the second French presidential TV debate on Tuesday.
  • In UK, PMIs, industrial production, construction data and trade balance are the focus.
  • In Japan, we mainly await confidence surveys
  • In Canada, main releases include labor data, PMI (manufacturing) and building permits.
  • In China, we only highlight PMI manufacturing.

Visually, courtesy of BofA:

From DB's Jim Reid, here is a breakdown of key daily events:

This morning we’re kicking off the week in Europe with the final manufacturing PMI’s for March as well as a first look at the data for the UK and periphery. Also due out is PPI and unemployment rate data for the Euro area. This afternoon in the US we’ll get the final manufacturing and composite PMI’s for March along with the ISM manufacturing print and February construction spending data. Later this evening we’ll also get the March vehicle sales data.

During the Asia session tomorrow we’ll have the RBA meeting outcome where no change is expected. In Europe we’ve got retail sales data for the Euro area due while in the US we will get the final durable and capital goods orders data revisions for February, along with February’s trade balance reading and factory orders data.

Wednesday looks set to be a busy data with the final March services and composite PMI’s due in Japan and then in Europe. We’ll also get the final services PMI in the US along with the ADP employment report for March and ISM non-manufacturing print. Also due out will be the March FOMC meeting minutes.

Turning to Thursday, the early data is due out of China with the Caixin PMI’s. In Germany we’ll get factory orders data while the ECB meeting minutes will also be released around lunchtime. In the US on Thursday the calendar is quiet with just initial jobless claims data due.

It looks set to be a busy end to the week on Friday. In Europe we are due to get industrial production reports and trade data for the UK, France and Germany. In the US all eyes will be on the March employment report including the all important payrolls print. Wholesale inventories and consumer credit will also be due out in the US.

Away from the data the Fedspeakers this week include Dudley, Harker and Lacker today followed by Tarullo on Tuesday and Williams on Thursday. The ECB’s Coeure speaks today. Away from that, the second French presidential debate is due tomorrow night. As with the first debate it will be televised live. President Trump is also due to host China President Xi Jinping on Thursday and Friday. An informal EU finance ministers meeting is also due on Friday and Saturday.

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Finally, a summary of all key US events with consensus expectations and highlights from Goldman

Monday, April 3

  • 09:45 AM Markit flash US manufacturing PMI, March final (consensus 53.5, last 53.4)
  • 10:00 AM ISM manufacturing, March (GS 57.0, consensus 57.2, last 57.7): Regional manufacturing surveys were mixed in March, and we expect ISM manufacturing to decrease by 0.7pt to 57.0 in the March report. The Philly Fed (-10.5pt to +32.8), Dallas Fed (-7.6pt to +16.9), and Empire State (-2.3pt to +16.4) manufacturing sector surveys declined while the Kansas City (+6pt to +20) and Richmond Fed (+5pt to +22) surveys moved higher. The Chicago PMI also edged up. Our manufacturing survey tracker—which is scaled to the ISM index—remains roughly unchanged at 59.1 in March.
  • 10:00 AM Construction spending, February (GS +1.1%, consensus +1.0%, last -1.0%): We expect construction spending to increase 1.1% in February, following a larger than expected 1.0% decline in January that reflected weaker public residential and nonresidential spending. Unseasonably warm weather is likely to contribute to a stronger February number.
  • 10:30 AM New York Fed President Dudley (FOMC voter) speaks: New York Fed President William Dudley will host a press briefing on household borrowing, student debt trends, and the impact of student debt and educational attainment on homeownership. Q&A is expected.
  • 03:00 Philadelphia Fed President Harker (FOMC non-voter) speaks: Philadelphia Fed President Patrick Harker will give a speech on financial technology at the University of Pennsylvania School of Engineering and Applied Science’s Technology, Business, and Government Lecture series. Audience and media Q&A is expected.
  • 05:00 PM Total vehicle sales, March (GS 17.3mn, consensus 17.3mn, last 17.5mn): Domestic vehicle sales, March (GS 13.8mn, consensus 13.7mn, last 13.7mn)

Tuesday, April 4

  • 08:30 AM Trade balance, February (GS -$44.2bn, consensus -$44.5bn, last -$48.5bn): We estimate the trade deficit narrowed sharply in February. The Advance Economic Indicators report last week showed a reversal of January’s widening in the goods trade deficit—likely related to the relatively early Chinese New Year—and we forecast similar improvement in the broader trade balance in this week’s report.
  • 10:00 AM Factory orders, February (GS +1.0%, consensus +1.0, last +1.2%); Durable goods orders, February final (consensus +1.9%, last +1.7%); Durable goods orders ex-transportation, February final (last +0.4%); Core capital goods orders, February final (last -0.1%); Core capital goods shipments, February final (last +1.0%): We expect factory orders to rise 1.0% following a 1.2% increase in January. Last week’s durable goods report showed stronger new durable goods orders and a rebound in core capital goods orders.
  • 04:30 PM Fed Governor Tarullo (FOMC voter) speaks: Federal Reserve Governor Daniel Tarullo will give a speech titled “Departing Thoughts” at the Woodrow Wilson School of Public and International Affairs at Princeton University in New Jersey. Audience Q&A is expected.

Wednesday, April 5

  • 08:15 AM ADP employment report, March (GS +200k, consensus +195k, last +298k): We expect a 200k increase in ADP payroll employment in March, reflecting encouraging hiring trends partially offset by some net softness in the financial and economic indicators also utilized in the ADP model. The ADP report introduced methodological changes with the October release and now offers more details by sector. While we believe the ADP employment report holds limited value for forecasting the BLS’s nonfarm payrolls report, we find that large ADP surprises vs. consensus forecasts are directionally correlated with nonfarm payroll surprises.
  • 09:45 AM Markit Flash US Services PMI, March final (last 52.9): 10:00 AM ISM non-manufacturing, March (GS 56.5, consensus 57.0, last 57.6): We expect the ISM non-manufacturing survey to decrease to 56.5 from 57.6 in the March report. Regional non-manufacturing surveys were on net softer in March, though they continue to signal moderate expansion in service-sector business activity. The Richmond Fed (-6pt to +9), New York Fed (-3.7pt to +11.5, SA by GS), and Dallas Fed (+2.4pt to +13.2) surveys all pulled back, while the Philly Fed non-manufacturing index strengthened (+6.1pt to +35.4). Overall, our non-manufacturing survey tracker ticked down to 56.7 in March (vs. 56.8 in February).
  • 02:00 PM FOMC Minutes from the March 14-15 meeting: The FOMC raised the funds rate target range by 25bp at its March meeting and made minor revisions to its statement. The median dot in the Summary of Economic Projections continued to show three hikes in both 2017 and 2018. In the minutes, we will look for any hints about the plans for balance sheet normalization, timing of the next hike as well, as well as any comments about the FOMC’s evolving expectations for fiscal policy under the new administration.

Thursday, April 6

  • 08:30 AM Initial jobless claims, week ended April 1 (GS 245k, consensus 250k, last 258k); Continuing jobless claims, week ended March 25 (consensus 2,040k, last 2,052k): We estimate initial jobless claims declined 13k to 245k, reversing the elevated readings of the past two weeks that we believe reflected the impact of Winter Storm Stella, which hit the US during the week of March 18th. State-level details suggest that the storm raised jobless claims by about 15k in each week. Continuing claims – the number of persons receiving benefits through standard programs – have continued to trend down in recent months, suggestive of additional labor market improvement that we expect to continue.
  • 09:30 AM San Francisco Fed President Williams (FOMC non-voter) speaks: Federal Reserve President John Williams will participate in a moderated panel discussion at the annual ECB and its Watchers conference in Frankfurt. The topic of the panel is focused on the questions: “Do monetary policy frameworks need to be adjusted in a world of (potentially) low natural real interest rates? If so, how?”.

Friday, April 7

  • 8:30 AM Nonfarm payroll employment, March (GS +170k, consensus +175k, last +235k); Private payroll employment, March (GS +170k, consensus +180k, last +227k); Average hourly earnings (mom), March (GS +0.2%, consensus +0.3%, last +0.1%); Average hourly earnings (yoy), March (GS +2.7%, consensus +2.7%, last +2.8%); Unemployment rate, March (GS 4.7%, consensus 4.7%, last 4.7%): We estimate nonfarm payrolls increased 170k in March following a 235k increase in February and compared to a three-month moving average of +209k. While we expect underlying job growth to be supported by encouraging employment surveys, we believe a sharp drop in temperatures and the early-month winter storms will depress payroll growth in weather-sensitive categories. Winter Storm Stella impacted the Midwest and East Coast early in the payroll survey week, and we believe the weather impact could be particularly large in comparison to February, which exhibited unseasonably warm weather and limited snowfall. A second potential headwind this month is the federal hiring freeze announced in late January (excluding defense and public safety), which could weigh on government payrolls. The extent of the headwind on overall payroll growth may be mitigated by the ability of government departments to circumvent the hiring freeze, for example through reduced attrition or increased contracted hiring, and these employer strategies may help explain the minimal impact of the hiring freeze in last month’s report. We expect the unemployment rate to remain stable to 4.7%, as the pace of household employment growth has picked up sharply over the last few months and may be due a pause. Finally, we expect average hourly earnings to increase 0.2% month over month and 2.7% year over year, reflecting the interaction of firming wage growth with slightly negative calendar effects.
  • 10:00 AM Wholesale inventories, January final (consensus +0.4%, last +0.4%)
  • 12:15 PM New York Fed President Dudley (FOMC voter) speaks: New York Fed President William Dudley will give a speech titled “Remarks on the State of Financial Regulation and the Potential for Reform” at the Princeton Club of New York. Moderated Q&A is expected.
  • 03:00 PM Consumer credit, February (consensus +$13.8bn, last +$8.8bn)

Source: BofA, DB, GS