According to analysts at National Bank Financial, for the US economy, the highlight of the week will be the central bank’s monetary policy meeting in addition to the April’s Non-Farm payrolls release.
Key Quotes
“Recent communications by FOMC members sounded cautiously optimistic, many of them shrugging off recession risks and showing growing confidence that the U.S. economy would stay on track going forward. While this suggests rate cuts may be out of the equation at this point, we don’t see the Fed returning to its hiking bias anytime soon, especially as it tries to convince markets that its 2% inflation target is a symmetric one. Economic news, especially on the inflation front, will need to surprise FOMC participants on the upside for a while for that to happen. We’re not there yet and, consequently, we see the Fed staying on the sidelines at this juncture.”
“April’s non-farm payrolls are also slated to come out on Friday. Jobless claims continued to hover near a 50-year low in the month, pointing to a very low rate of layoffs. Hiring, on the other hand, may have eased slightly from the prior month’s healthy pace judging from Markit’s preliminary composite PMI reading. Accordingly, we’re calling for a +160K print. The unemployment rate, for its part, may stay put at 3.8% if, as we believe, the household survey shows a modest increase in employment.”
“Still in April, the ISM manufacturing index could come in roughly unchanged, echoing Markit’s flash manufacturing PMI for the same month.”
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