Jobs Report Will Be the Highlight of the Upcoming Week
Don't Miss It! Why This Week Is Big for Fed Watchers
Last jobs report before the FOMC meeting
This week contains a slew of important economic data including the all-important jobs report. This will be the last jobs report before the March 15–16 FOMC meeting. The most important piece of the jobs report will be the increase in average hourly earnings. Recently, there have been indications that wage growth is increasing. This will give the Fed the cover it needs to increase rates.
In other economic data, we’ll discuss construction spending, factory orders, the ISM data, durable goods, and productivity. These aren’t as important to the Fed, but they still matter. The pain in the oil patch will probably have a negative impact on these numbers. However, the Fed views commodity-related slowness as transitory. The Fed tends to downplay its importance.
Finally, real estate earnings are done for the most part. The only ones left are retailers.
Economic data this week
Here’s a rundown of this week’s economic data.
Monday, February 29:
ISM Milwaukee
Chicago Purchasing Manager
Pending Home Sales
Dallas Fed
Tuesday, March 1:
Markit US Manufacturing PMI
IBD / TIPP Economic Optimism
ISM Manufacturing
ISM Prices Paid
ISM New Orders
Construction Spending
Vehicle Sales
Wednesday, March 2:
MBA Mortgage Applications
ADP Employment Change
ISM New York
Beige Book
Thursday, March 3:
initial jobless claims
Bloomberg Consumer Comfort
Nonfarm Productivity
Unit Labor Costs
Challenger Job Cuts
Markit US Services PMI
Markit US Composite PMI
ISM Non-Manufacturing Composite
Factory Orders
Durable Goods Orders
Capital Goods Shipments
Friday, March 4:
Non-Farm Payrolls
Unemployment Rate
Labor Force Participation Rate
Average Hourly Earnings
Average Weekly Hours
Earnings this week
No real estate-related earnings
Implications for mortgage REITs
REITs like Annaly Capital Management (NLY) and American Capital Agency (AGNC) will likely focus on data that will move the bond market. For them, it will be all about the jobs report. REITs have been increasing their leverage somewhat. They want to take advantage of a more benign interest rate environment and add credit risk to their portfolios. Investors who want to bet on interest rates can look at the iShares 20+ Year Treasury Bond ETF (TLT).
Impact on homebuilders
Homebuilders like Lennar (LEN) and CalAtlantic (CAA) will pay the most attention to pending home sales and construction spending. The seasonal uptick for the homebuilding sector is just starting. Investors can trade the homebuilding sector through the SPDR S&P Homebuilders ETF (XHB).
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