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Market headline of the day: Stock futures jump as traders digest jobs report, look ahead to Fed remarks
Stock futures jumped Monday morning as traders took in last week’s much stronger-than-expected monthly jobs report and looked ahead to a busy week of commentary from Federal Open Market Committee (FOMC) members.
Traders today returned from a long holiday weekend after Friday’s stock market closure in observance of Good Friday. As a results, Monday’s regular trading session marks the first since the March jobs report was released Friday morning, which showed that the economy gained a stunning 916,000 payrolls last month with an unemployment rate that ticked down to 6.0%.
This week’s calendar will be relatively light in terms of new economic data, and very few corporate earnings results are slated for release. However, a number of Fed policymakers are scheduled to speak, offering their own assessment of how the latest, estimates-topping data informs their perspectives on when to tweak their ultra-accommodative monetary policy going forward. Chicago Fed President Charles Evans, Richmond Fed President Thomas Barkin and St. Louis Fed President Jim Bullard are each slated to deliver public remarks later this week, and Fed Chair Jerome Powell will speak at an an International Monetary Fund panel on the global economy Thursday afternoon.
The central bank is also poised to release the meeting minutes from its March FOMC meeting on Wednesday. While these will not account for the latest batch of economic data, the notes will offer a glimpse at policymakers’ thinking over whether some members were inclined to look past the first signs of a faster-than-expected economic recovery in dictating the direction of monetary policy.
“At last month’s meeting, the FOMC significantly upgraded their economic forecasts yet kept their median interest rate projections unchanged. As such, a close eye will be kept on any discussions that shed light on the disconnect between the hawkish economic forecasts and the dovish dots,” Wells Fargo economist Sam Bullard wrote in a note Monday morning. “While the consensus of the FOMC continues to suggest that the committee will wait for their forecasts to be realized before taking policy action, it will be interesting to see if there is any intense discussion about the implications of the stronger outlook, particularly around inflation. Most Fed officials expect any pick-up in inflation to be “transitory,” yet we suspect there are a few officials that are pushing back on that narrative.”
U.S. Treasury yields rise slightly after bumper jobs report
The U.S. 10-year Treasury yield moved slightly higher early Monday as traders continued to digest March’s bumper jobs report.
The yield on the benchmark 10-year Treasury note ticked up to 1.731% in morning trade. The yield on the 30-year Treasury bond also rose to 2.382%. Yields move inversely to prices.
Also last week, President Joe Biden unveiled the infrastructure and economic recovery package, which includes spending on transportation, broadband and affordable housing. The plan will be funded in part by a rise in the corporate tax rate to 28%.
It faces some opposition from Republicans, however, with Sen. Roy Blunt of Missouri on Sunday urging the Biden administration to pare back the package. He called for a shift in focus to infrastructure such as roads and airports.
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Our reporting will continue soon and we are looking forward to this spring and summer as that’s usually the time of year we really shine.
The Traders News Group