U.S. INVESTORS AWAIT ECONOMIC DATA
Traders not expecting a recession any time soon, seeking clarity from reports
WALL Street will be watching this week’s economic data with a laser focus after a dismal February jobs report and recessionary warning signals from United States Treasury yields.
After the longest US government shutdown on record, bad weather and a late last year equities sell-off muddied market participants’ view on the US economy in recent months, they are hoping for a clearer view from upcoming data.
Investors have been anxious for reassurance since US Treasury 10-year note yields last Friday fell below three-month Treasury bill yields for the first time since 2007.
The S&P fell almost two per cent that day as yield curve inversions were widely viewed as recessionary indicators and this one occurred two days after the US Federal Reserve pulled back on expected rate hikes amid signs of slowing economic growth.
“Investors are going to be hyper-sensitive to data,” said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago.
strong enough to alter slowing US economic momentum.
Economists, on average, expect a February increase of 0.3 per cent.
“If we were to witness a faltering of the US consumer, that would be very difficult for markets, which are relying on the US consumer to propel the cycle through at least another year,” said Frances Donald, head of macroeconomic strategy at Manulife in Toronto.
Strong capital expenditure would also surprise TD Ameritrade chief market strategist J.J. Kinahan, who says companies have stalled spending as they await the outcome of US-China trade talks.
Kinahan says US-China tensions could mute market reactions to data “unless it’s so far off to the upside or the downside.”
Options contracts on the S&P 500 Index and its tracking fund, the SPDR S&P 500 ETF Trust, show a modest uptick in the volatility priced into contracts expiring this Friday, compared with other near-term expirations.