Back of the Mountain

I've been buried by mountain of things at work. Much of the economic drivers have taken a backseat to Macro-Economic events. If the President's decision to limit bank executive pay comes to fruition, this could be a VERY interesting development over the next several years. Always follow the money....

This week's economic calendar:

Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis


Mon. Feb. 2, 8:30 a.m. ET
Dec. Personal Income
Spending
PCE Index
-0.4% vs. last -0.2%
-0.9% vs. last -0.6%
Unchanged
Further erosion in the employment sector has taken a toll on personal incomes and the pace of spending. The personal consumption expenditure index, one of the Fed’s favorite measures of inflation pressure at the consumer level, is expected to remain benign. This data is already priced into the fixed income market.

Mon. Feb. 2, 10:00 a.m. ET
Jan. Institute of Supply Mgmt.
32.6 vs. last 32.9
Market participants are well aware that the manufacturing sector is under pressure as last week’s durable goods orders report showed demand has contracted for five consecutive months while inventories continue to rise. This data drew nothing more than a passing glance from investors.


Tue. Feb. 3
Empty

Wed. Feb. 4, 10:00 a.m. ET
Jan. Institute of Supply Mgmt.
Service Index
39.0 vs. last 40.1
This broad barometer of economic activity is expected to show business conditions remained slack in January. Should the actual number fall close to the consensus estimate (a reasonable expectation) the impact of this data on the current level of mortgage interest rates will be negligible.

Thurs. Feb. 5, 8:30 a.m. ET
Initial jobless claims for the week ended 1/31
Down 5,000
Further erosion in the employment sector is broadly anticipated by investors and has already been deeply priced into the current market. Today’s figures will likely draw little more than a passing glance from market participants.


Thurs. Feb. 5, 8:30 a.m. ET
1st estimate Q1 Productivity
Unit Cost
+1.1 vs. last +1.3
+2.9 vs. last +2.8
Declining productivity and rising unit labor cost will likely be slightly unsettling for fixed income investors. Probably not unsettling enough to cause homeowner mortgage rates to move notably higher but enough to make it difficult for rates to make much headway in any effort to move lower.

Thurs. Feb. 5, 10:00 a.m. ET
Dec. Factory Orders
-3.0% vs. last -4.6%
This old stale bit of macro-economic news will likely do nothing more than take up space on this week’s calendar.


Fri. Feb. 6, 8:30 a.m. ET
Jan. Nonfarm Payrolls
Jobless Rate
Average hourly earnings
-524,000
7.5% vs. last 7.2%
+0.2% vs. last +0.3%
Bond investors are keenly aware the labor market has fallen-off-of-a-cliff. A really nasty series of numbers have already been priced into the market here -- which means this report will likely have little, if any meaningful impact on the trend trajectory of interest rates if the actual numbers reasonably approximate the consensus estimate.