After a holiday shortened week, the bond market has a lot to digest in the week ahead.
With Black Friday having come and gone, analysts will be looking for clues. If the sales were strong it will help reinforce recent data that consumer spending is picking up, unemployment is ticking down, and consumer confidence is at higher levels. Greece and Ireland have accepted bailouts with Spain and Portugal next in line.
Now for the actual reports and their importance to the interest rate markets: Tuesday has the release of the “Chicago PMI.” Last month came in at 60.6 and the consensus for this month is 61. A reading above 50 indicates an expanding business sector, and the Chicago region somewhat mirrors the nation in its distribution of manufacturing and non-manufacturing activity. Also to be released is “Consumer Confidence,” an important report as retail sales move in tandem with consumer confidence. Last month’s reading was 50.2 and the consensus for this month is a reading of 52 – historic lows.
Wednesday has four releases. First up, “The Challenger Report” is important in that it is somewhat of a leading indicator for jobless claims. Last month, 37,986 layoffs were reported. Then there’s “ADP Employment,” which is seen as a precursor for the big jobs report on the first Friday of every month. “Productivity and Costs” showed a gain last month in productivity of 1.9% with a unit labor cost of -.1%. The consensus is for an increase in productivity to 2.4% with no increase in the unit labor costs. This is obviously important for a peak at potential inflation. “The Beige Book” is a look at economic conditions used by the FMOC to set interest rates.
Thursday’s release is the weekly unemployment claims. The consensus is for an increase from 407,000 to 425,000.
Friday has two major releases: “The Jobs Report” last month showed a sizable increase in job growth with 151,000 new jobs created. The consensus for this month is for an increase of 168,000 and hourly earnings up .2%. “Factory Orders” which were up last month 2.1% are expected to have decreased .8% this month.
