US Credit Mkt Wk Ahd: Data, FOMC, Quarterly Refunding

     CHICAGO (MNI) - A busy week ahead starts off slowly with several economic

data releases including MNI Chicago PMI Monday morning (57.8 exp) followed by

the two day FOMC monetary policy meeting that starts Tuesday, the announcement

with no conference or economic projections on Wednesday.

     Treasury's Quarterly Refunding will also be announced on Wednesday, May 2.

     A flurry of data releases over the next couple sessions includes weekly

claims and ADP private payrolls data early Wednesday that may lend some insight

to Friday's headline April non-farm payrolls data (MNI's survey of economists

estimate a rise of 185,000 jobs).

     Meanwhile, the media blackout ends with Fed presidents Quarles, Dudley, and

Kaplan are each scheduled to speak later in the session Friday.

     Despite the rise in rate hike probability for the May meeting earlier in

the week, dealer economists do not expect a surprise rate hike. 

     JP Morgan economists said the "more interesting statement revisions will

come in the Fed's re-write of the inflation language."

     JP Morgan said they "anticipate the year-ago readings on March headline and

core PCE inflation will print at 2.0% and 1.9%, respectively. This will

necessitate a change in wording to note that inflation is now effectively right

at the Fed's target. The outlook section will also need to be revised to say the

Committee looks for inflation to continue to stabilize around 2 percent."

     TD Securities macro strategists also "expect a largely unchanged policy

statement, which should have little implications for rates" while rate markets

are "almost fully pricing in a June hike and a little over one hike for the rest

of the year."

     Deutsche Bank economists "also expect relatively minor changes" in the FOMC

statement "will take into account the recent firming inflation data.

Specifically, the language around inflation will likely change to reflect that

recent year-over-year prints 'are near 2 percent' rather than 'have continued to

run below 2 percent'."

     On Wednesday's quarterly refunding, JP Morgan expects the Treasury "to

increase auction sizes across the curve once again. We also expect Treasury to

announce a 2-month bill and a second 5-year TIPS issue for auction later this

year," while Morgan Stanley expects "boosts to coupon issuance across

benchmarks, with 5s and 7s likely taking the brunt of the issuance bump in May."

     TD Securities expect the Treasury "to increase auction sizes once again

with a concentration in the 2-5y sector and FRNs and the remaining to be made up

via bills. We do expect sizes of 7s,10s and 30s to also increase, but by a

smaller amount" and the Treasury to "commit to a new 5y TIPS to be auctioned in

October."

     On Friday's headline employment report, Morgan Stanley economists "expect

some improvement in April and look for job gains to come in at 145,000." MS also

forecasts a "0.2% increase in average hourly earnings, following a 0.3% gain in

March, which would hold the year-over-year rate at 2.7%."

     TD Securities economists are "looking for a strong jobs report with 210k in

payrolls, a 4% unemployment rate but a more muted 0.2% earnings growth. Note

that yoy average hourly growth should remain around 2.7%."

     Deutsche Bank said there should be "some rebound from last month's likely

weather-distorted payrolls, especially as the construction sector experienced

the largest drop in monthly payroll additions (from +65k in February to -15k in

March) since April 2007."

     DB posited "Wednesday's ADP (+185k vs. +241k) report and the employment

component from Thursday's non-manufacturing ISM (58.5 vs. 58.8) will serve to

set expectations for payrolls, both overall (+185k forecast vs. +103k previous)

and private (+185k vs. +102k)."

     Monthly Fed reinvestment caps consistent with the FOMC Sept. 20 decision

and June 2017 addendum:

MONTHLY CAPS ON SOMA SECURITIES REDUCTIONS

US TREASURIES.../AGENCY MBS/MONTH CAP 

- Oct-Dec 2017.. $6 billion./$4 billion 

- Jan-Mar 2018.. $12 billion/$8 billion 

- Apr-Jun 2018 $18 billion../$12 billion 

- Jul-Sep 2018 $24 billion../$16 billion 

- From Oct 2018** $30 billion $20 billion

Calendar of next week's market events (prior, estimate): 

- Apr 30 Mar personal income (0.4%, 0.4%) 0830ET

- Apr 30 Mar current dollar PCE (0.2%, 0.4%) 0830ET

- Apr 30 Mar total PCE price index (0.2%, 0.2%) 0830ET

- Apr 30 Mar core PCE price index (0.2%, --) 0830ET

- Apr 30 Apr ISM-Milwaukee Mfg Index 0900ET

- Apr 30 Apr MNI Chicago PMI (57.4, 57.8) 0945ET

- Apr 30 Mar NAR pending home sales index (107.5, --) 1000ET

- Apr 30 Apr Dallas Fed manufacturing index (21.4, --) 1030ET

- May 01 FOMC policy meeting starts

- May 01 NA-made light vehicle sales SAAR (13.3m, --)

- May 01 28-Apr Redbook retail sales m/m (0.3%, --) 0855ET

- May 01 Apr Markit Mfg Index (final) (56.5, --) 0945ET

- May 01 Apr ISM Manufacturing Index (59.3, --) 1000ET

- May 01 Mar construction spending (0.1%, 0.5%) 1000ET

- May 01 May Dallas Fed services index (13.5, --) 1030ET

- May 02 FOMC policy meeting day 2

- May 02 27-Apr MBA Mortgage Applications (-0.2%, --) 0700ET

- May 02 Apr ADP private payrolls (241k, --) 0815ET

- May 02 Apr ISM-NY current conditions (54.0, --) 0945ET

- May 02 May help-wanted online ratio (1.25, --) 1000ET

- May 02 27-Apr crude oil stocks ex. SPR w/w (2.17m bbl, --) 1030ET

- May 02 FOMC policy announcement, no conference or economic projections 1400ET

- May 03 Apr challenger layoff plans (39.4%, --) 0730ET

- May 03 28-Apr jobless claims (209k, --) 0830ET

- May 03 Q1 non-farm productivity (p) (0.0%, 0.9%) 0830ET

- May 03 Q1 unit labor costs (p) (2.5%, 3.0%) 0830ET

- May 03 Mar trade balance (-$57.6b, -$50.0b) 0830ET

- May 03 Apr Markit Services Index (final) (54.4, --) 0945ET

- May 03 29-Apr Bloomberg comfort index (57.5, --) 0945ET

- May 03 Apr ISM Non-manufacturing Index (58.8, 58.1) 1000ET

- May 03 Mar factory new orders (1.2%, 1.2%) 1000ET

- May 03 Mar factory orders ex transport (0.1%, --) 1000ET

- May 03 27-Apr natural gas stocks w/w (-18Bcf, --) 1030ET

- May 03 02-May Fed weekly securities holdings 1630ET

- May 04 Apr nonfarm payrolls (103k, 185k) 0830ET

- May 04 Apr private payrolls (102k, 191k) 0830ET

- May 04 Apr unemployment rate (4.1%, 4.0%) 0830ET

- May 04 Apr average hourly earnings (0.3%, 0.2%) 0830ET

- May 04 Apr average workweek, all workers (34.5hrs, 34.5hrs) 0830ET

- May 04 Q2 St. Louis Fed Real GDP Nowcast 1100ET

- May 04 Q2 NY Fed GDP Nowcast (3.2%, --) 1115ET

- May 04 Apr Treasury STRIPS Holdings 1500ET

--MNI Chicago Bureau; tel: +1 312-431-0089; email: bill.sokolis@marketnews.com

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

[TOPICS: MTABLE,M$U$$$,M$$FI$,MN$FI$,MN$FX$]