Although it was a shortened trading week, it was certainly an eventful one.
Tuesday kicked off with job openings data that came in higher than expected. Meanwhile, both the ISM Manufacturing and Services indices came in slightly below forecasts—not great, but far from alarming. The ADP employment report, on the other hand, was a disappointment, marking its weakest reading since March 2023.
Interestingly, the official Bureau of Labor Statistics report for the month beat expectations and included upward revisions for the prior two months. Still, the headline wasn’t as rosy as it looked—about half of the job gains came from government employment. The unemployment rate dipped to 4.1%, but that was largely due to a decline in labor force participation. Immigration policy may be playing a role in that contraction.
Wage growth cooled to 3.7%, which could be encouraging for the Fed as it aligns more closely with the 2% inflation target. For everyday Americans, however, slower wage growth isn't necessarily a win. Nonetheless, it’s a stable number in the current context.
Equities continued to surge to fresh all-time highs. However, the rally in bond yields was less intuitive, given the data. That move seemed more tied to political developments—specifically, reports that some previously hesitant Republicans are now backing the much-discussed spending bill. That shift raises the likelihood of higher government debt, which in turn could be pushing yields higher.
Looking Ahead
This week is much lighter in terms of economic data. On Tuesday, we’ll be watching the NFIB Small Business Survey and consumer credit data—useful for gauging the real economy, but not necessarily market direction. Wednesday brings the release of the latest Fed meeting minutes. These are always worth a look, though they often feel dated given the constant stream of Fed speak.
Thursday’s initial jobless claims and Friday’s Treasury budget report round out the week.
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– HPK Provident Advisors
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth may not develop as predicted