The Market Today
ISM Services PMI Expected to Snap Back in March Following Jobs Report Showing Accelerating Recovery
by Craig Dismuke, Dudley Carter
CORONAVIRUS UPDATE (VS Coronavirus Chartbook – PDF)
ISM Services Survey Expected to Snap Back in March: Today’s key economic report will be released at 9 a.m. CT. The ISM’s Services index is expected to rise from 55.3 to 59.0 in March which would mark its best level since November 2018. Data last week showed the Manufacturing Index jumped more than expected to its best level since 1983. Friday’s payroll report was surprisingly strong and showed solid job growth across most sectors, including services industries. Just before the ISM report is released, Markit will revise the initial estimate for its Services PMI, which showed a small improvement in March.
Factory Orders Report: Also at 9 a.m. CT, the Census Bureau will release its Factory Orders report for February that will include revisions to initial estimates for durable goods activity and capital goods orders and shipments. Total orders are expected to drop 0.5% following the early indications that durable and capital goods activity slowed amid the winter weather.
24 HOURS OF MARKET ACTIVITY
World Markets Remain Closed on Easter Monday; U.S. Assets Signal Optimism in the Wake of Friday’s Strong Jobs Data: A significant portion of the global market remained closed after a Friday break in observance of Easter Monday. U.S. assets, however, were signaling a modestly optimistic resumption of trade in the wake of last Friday’s encouragingly strong March payroll report. U.S. equity futures were open for trade and gained after the Friday jobs report, but the U.S. stock market was closed in observance of Good Friday. At 7 a.m. on Monday, contracts on the S&P 500 and Nasdaq were up around 0.5% while Dow futures were in the lead, up more than 0.6% on the day. The bond market did open last Friday, allowing for a sizeable move up in yields before an early close after the BLS released the employment data which were essentially beyond reproach. The bias for longer yields remained tilted upwards early Monday, with the 10-year yield adding another 1.4 bps to 1.74% in front of a couple of updates showing how the U.S. services sector fared in March.
ICYMI – April 2, 2021 Weekly Market Recap: Last week’s economic reports provided additional evidence that the negative effects of winter weather on many sectors of the economy in February should prove temporary. Most notably, pending home sales registered their sharpest decline since last April in February and construction spending contracted on weakness across nearly every category. However, the more timely data signaled activity snapped back in March. Consumer confidence spiked to a new pandemic high with its strongest month since 2003, likely a reflection of the acceleration of vaccines and new stimulus package passed during the month. The ISM Manufacturing Index also jumped by more than expected to its best level since 1983. Adding to the optimism, the March payroll report blew away expectations with widespread strength adding to a growing optimism that the recovery will continue to gain steam as more of the economy reopens. That optimism could make what are already expected to be tense partisan negotiations around the President’s multi-trillion-dollar economic spending package, the first half of which he detailed last week, more difficult. The S&P 500 ended Thursday at a record high and was closed Friday in observance of Good Friday. The 10-year Treasury yield rose 4.6 bps to 1.72%. Click here to view the full recap.