Comentario semanal sobre los mercados de Administración de activos

Market updates for the week ending March 1, 2024

Observaciones clave

  • Stocks were rudderless and range-bound into mid-week leading up to the closely watched release of the FOMC’s preferred inflation gauge from January, a report that universally met expectations. Investors took some level of comfort from the inflation report and fear surrounding the FOMC’s next move being a hike, not a cut, appeared to subside.
  • Domestic equity indices staged a late week rally with smaller capitalization stocks keeping pace with large caps. Within small cap indices, the least profitable, lowest quality names appeared to lead the charge, evidence of robust investor risk appetite, but also cause for skepticism given how far the broader market has come year-to-date and over the past four months.
  • Bond investors were able to breathe a sigh of relief as a closely watched inflation report for January matched the consensus expectation. Treasury yields across the curve ended the week lower, with most maturities closing within 5-to-10 basis points of where they started the week. With January PCE now in the rearview mirror, bond investors could find themselves in a clip your coupon environment for the next few weeks leading up to the FOMC’s March 19-20 meeting.

A qué estamos atentos

  • The Non-Manufacturing or Services Purchasing Managers Index (PMI) for February is released Tuesday and is expected to fall to 52.1 from 53.4 in January. A reading above 50 indicates that the non-manufacturing economy is generally expanding; below 50, that it is generally contracting/declining. Continued strength out of the services sector has prevented inflationary pressures from subsiding as quickly as monetary policymakers might have hoped, and fed funds futures could key off this metric and recalibrate rate cut expectations over coming months as a result.
  • U.S. nonfarm payrolls for February are released Friday and 225k jobs are expected to have been created during the month, which would be a sizable and noteworthy drop from the 353k created in January. The unemployment rate is expected to fall to 3.6% from 3.7% in January while average hourly earnings are expected to rise 0.3% month over month which would be a notable deceleration from 0.6% month over month growth in January. A modest cooling of the labor market, evidenced by a month over month drop in jobs created and/or average hourly earnings would likely be welcome news for the FOMC after January’s hotter than expected inflation readings.