This week, Wednesday to Friday is crammed with economic releases, many of which will be key data points for the Fed’s April FOMC and have a significant impact on the Fed funds rate and the yield curve.
In this series, we cover the major data releases between Wednesday and Friday
- The gross domestic product (or GDP) estimate for the first quarter of 2014 will release on Wednesday, April 30.
- The personal income and outlays report for March will be issued by the U.S. Census Bureau and on Thursday, May 1. This will also measure personal consumption expenditure (or PCE) price index changes for March. The Fed uses this measure for its inflation estimates.
- Purchasing managers’ index (or PMI) reports will be issued by the Institute of Supply Management and Markit Intelligence on Thursday, May 1.
- Auto sales figures for April will be released by the Bureau of Economic Analysis on Thursday, May 1.
- Construction spending figures for March will be released by the U.S. Census Bureau on Thursday, May 1.
- The factory orders report for March will be released by the U.S. Census Bureau on Friday, May 2.
- Employment indicators releasing Wednesday through Friday include the ADP employment report (Wednesday), Gallup’s payroll-to-population report (Thursday), initial jobless claims (Thursday), the Challenger job cut report (Thursday), and the Bureau of Labor Statistics’ non-farm payrolls report (Friday).
All these releases will have an impact on both stock (VOO) and bond (BND) markets. As they pertain to inflation, economic growth, and the labor market, they’ll also impact the Fed’s decision on the timing of its increase in the Fed funds rate besides impacting yields on fixed-income securities.
Further, the timing of releases like the GDP, inflation estimates, and key labor market indicators will coincide with the Fed’s FOMC meeting announcement, providing further cause for volatility in markets. Although these releases usually cause system-wide market movements in both stock (VOO) and bond markets (TLT), key sectors to watch this week will be the manufacturing sector (XLI) and the consumer discretionary sectors (XRT). ETFs investing in the above sectors include the State Street Industrial Select Sector SPDR (XLI) and the State Street SPDR S&P Retail ETF (XRT).
In the next part of this series, we’ll preview the first-quarter GDP figures that will be released by the Bureau of Economic Analysis on Wednesday, April 30.