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US Credit Mkt Wk Ahd: Heavy Data Nxt Wk/Fed Speak Pre-Blackout

     CHICAGO (MNI) - Rates markets continued to trade strong in lead-up to and
the day after Wednesday's minutes release from the May 1-2 FOMC, showing little
initial reaction to dovish/less hawkish tone (depending on your viewpoint, as
others see "symmetry" as being "preemptively hawkish").
     Multiple mentions of symmetrical objective, willingness to let things run
hot and tweaking interest on excess reserves continue to be digested by pundits.
     Yields have drifted off multi-year highs (10YY 3.12%) from late last week
to below 3.0% late Thursday (10YY 2.979%) as US dollar correlation to Japanese
Yen reasserted itself (dipping below 109.0 briefly).
     While a rate hike is still expected at the June FOMC, the drop in yields
corresponds to a decline in rate hike probability out the curve with September
below 40%. Both Fed presidents Bostic (voter) and Harker (non-voter) expressed
comfort with three hikes in 2018.
     Meanwhile, political turmoil surrounding Italy, Turkey, emerging market
stress, trade negotiations with China and putting North Korea summit plans on
hold (and new sanctions being considered) continue to lend a certain amount
risk-off support for rates.
     Indeed, Fed's Bostic conceded that geopolitical tensions and uncertainty
can "weigh on confidence."
     Needless to say, market participants do not appear overly eager to tie on
additional risk heading into extended Memorial day holiday weekend in the U.S.
(UK markets closed Monday as well.
     U.S. markets will return to a surfeit of data (GDP, PCE, PMI) culminating
in the May employment data next Friday, June 1.
     Credit Suisse economists note the strong start to payrolls has moderated
the last couple months and is "likely to continue" to do so. CS expects
"headline payrolls to come in at 170K for May," while the "unemployment rate
fell sharply in April to 3.9% and we expect it can maintain this low level in
May. Average hourly earnings are likely to rise 0.2% MoM, leaving the YoY growth
rate unchanged at 2.6%."
     Nomura economists, on the other hand "forecast a solid 205k nonfarm payroll
employment increase in May, with essentially all of the gain coming from private
employers. Incoming labor market data point to steady employment growth and a
still-low unemployment rate, consistent with our optimistic outlook for Q2 and
     Nomura said initial jobless claims should "remain subdued while the
four-week moving average of continuing unemployment insurance claims has
recently reached levels not seen since the early 1970s. We expect average hourly
earnings to increase 0.22% m-o-m, likely leaving the y-o-y rate unchanged at
     RBC economists are near the top end of expectations, looking for "payroll
growth to accelerate in May and have built in gains of 215,000 for both headline
and private NFPs."
     While labor markets continue to tighten, RBC adds, "cyclical participation
inching back towards the prior expansion highs, we expect wage growth will
continue to accelerate through the balance of 2018."
     Meanwhile, multiple Fed speakers will also be on tap as they rush to get
their opinion in ahead the next media blackout period starts Saturday June 2 and
goes through Thursday June 14, the day after the next FOMC announcement.
     Early Tuesday at 0040ET, St. Louis Federal Reserve Bank President James
Bullard will discuss the U.S. economy and monetary policy at the Japan Center
for International Finance's Global Finance Seminar, in Minato-ku, Tokyo, with
audience and media Q&A.
     At 1500ET Wednesday, Federal Reserve Board of Governors are scheduled to
hold an open meeting to discuss issuing a proposed rule for public comment on
modifying the "Volcker rule" in Washington.
     Federal Reserve Board of Governors will hold an open meeting at 1230ET
Thursday to discuss issuing a proposed rule for public comment on modifying the
"Volcker rule" in Washington.
     Monthly Fed reinvestment caps consistent with the FOMC Sept. 20 decision
and June 2017 addendum:
- 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): 
- May 29 StL Fed Pres Bullard, U.S. economy and mon/pol, Japan Center for Int
Finance's Global Finance Seminar, Minato-ku, Tokyo, audience & media Q&A 0040ET
- May 29 Mar Case-Shiller Home Price Index (0.8, --) 0900ET
- May 29 May Conference Board confidence (128.7, 128.0) 1000ET
- May 29 May Dallas Fed manufacturing index (21.8, --) 1030ET
- May 30 25-May MBA Mortgage Applications (-2.6%, --) 0700ET
- May 30 Apr ADP private payrolls (204k, --) 0815ET
- May 30 Q1 GDP (2nd) (2.3%, 2.3%) 0830ET
- May 30 Q1 GDP Price Index (2.0%, 2.0%) 0830ET
- May 30 Apr advance goods trade gap (-68.3b USD, --) 0830ET
- May 30 Apr advance wholesale inventories (0.5%, --) 0830ET
- May 30 Apr advance retail inventories (-0.4%, --) 0830ET
- May 30 26-May Redbook retail sales m/m (0.0%, --) 0855ET
- May 30 May help-wanted online ratio (1.24, --) 1000ET
- May 30 May Dallas Fed services index (14.5, --) 1030ET
- May 30 Fed Reserve Beige Book for upcoming June FOMC 1400ET
- May 30 Apr farm prices (4.5%, --) 1500ET
- May 31 Apr challenger layoff plans (-1.4%, --) 0730ET
- May 31 26-May jobless claims (234k, 223k) 0830ET  
- May 31 Apr personal income (0.3%, 0.3%) 0830ET
- May 31 Apr current dollar PCE (0.4%, 0.4%) 0830ET
- May 31 Apr total PCE price index (0.0%, --) 0830ET
- May 31 Apr core PCE price index (0.2%, 0.1%) 0830ET
- May 31 May ISM-Milwaukee Mfg Index (58.3, --) 0900ET
- May 31 May MNI Chicago PMI (57.6, 57.0) 0945ET
- May 31 27-May Bloomberg comfort index 0945ET
- May 31 Apr NAR pending home sales index (107.6, --) 1000ET
- May 31 25-May natural gas stocks w/w 1030ET
- May 31 25-May crude oil stocks ex. SPR w/w (+5.78m bbl, --) 1100ET
- May 31 Atl Fed Pres Bostic moderated Q&A, Florida Prosperity Partnership Tenth
Annual Statewide Training Conf, Orlando, 1230ET
- May 31 30-May Fed weekly securities holdings 1630ET
- Jun 01 May NA-made light vehicle sales SAAR (9.91m, 12.8m)
- Jun 01 May nonfarm payrolls (164k, 190k)) 0830ET
- Jun 01 May private payrolls (168k, 185k) 0830ET
- Jun 01 May unemployment rate (3.9%, 3.9%) 0830ET
- Jun 01 May average hourly earnings (0.1%, 0.2%) 0830ET
- Jun 01 May average workweek, all workers (34.5h, 34.5h) 0830ET
- Jun 01 May Markit Mfg Index (final) (56.6, --) 0945ET
- Jun 01 May ISM Manufacturing Index (57.3, 58.3) 1000ET
- Jun 01 Apr construction spending (-1.7%, 0.8%) 1000ET
- Jun 01 Q2 St. Louis Fed Real GDP Nowcast 1100ET
- Jun 01 Q2 NY Fed GDP Nowcast 1115ET
--MNI Chicago Bureau; tel: +1 312-431-0089; email:
--MNI Washington Bureau; tel: +1 202-371-2121; email:

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