chris hondros
Stock index futures were little changed on Friday as traders braced for a very short window to react to the March jobs report.
Wall Street will be closed for regular stock trading on Good Friday, along with Europe’s major exchanges. But since it is not a US federal holiday, payslips will arrive at 8:30 am ET as usual.
S&P Futures (SPX) -0.1%Dow Futures (INDU) -0.1% and Nasdaq Futures (NDX:IND) –0.1% they were a bit off.
Stock index futures on the CME will trade until 9:15 am ET, giving investors 45 minutes to react to a very important employment report after a week of data (JOLTS, ADP, claims) that show a weakening of the labor market.
This jobs report and the upcoming March CPI will have a big influence on a Fed that the market says could go either way at its May meeting. Fed funds futures prices are bottoming out at a 25 basis point rise to 51% against a 49% chance of no move.
The “Fed has forecast a trough to peak rise in the US unemployment rate of about 1.0% in 2023,” wrote James A. Kostohryz, leader of the Successful Portfolio Strategy Investment Group. “So far, virtually none of the easing in the labor market that the Fed expected to see has happened so far.”
“Unless the numbers in the March report show substantial weakness, the Fed will remain under considerable pressure to continue raising the fed funds rate.”
Bond market trading will also be down with a recommended close at noon ET (it would normally be closed if not for today’s data).
The 10-year Treasury yield (US10Y) rose 1 basis point to 3.30% and the 2-year yield (US2Y) rose 1 basis point to 3.83%.
For the jobs report, forecasts have been trending lower this week with consensus pointing to an increase in nonfarm payrolls to around 215,000, down from 240,000 on Thursday. The unemployment rate is expected to remain at 3.6%.
“Both the Homebase data and the NFIB survey point to a payroll print of 250,000 for March,” said Ian Shepherdson of Pantheon Macro. “But rising jobless claims and falling hiring intentions point to much weaker numbers in the second quarter.”
“A 250K print would be too high for the Fed,” he said. “FOMC members remain concerned that such rapid job growth will push the unemployment rate to new lows and/or prevent wage inflation from decelerating to a rate consistent with the inflation target. We would counter by saying that wage growth will It has slowed markedly from its peak in late 2021 even though the unemployment rate has returned to its pre-Covid low.”
The S&P 500 (SP500) snapped a three-week winning streak in this holiday-shortened week.
