Daily Commentary
Commentary prepared by Alloya Investment Services, a division of the wholly owned CUSO of Alloya Corporate Federal Credit Union. Alloya Investment Services is a leading broker/dealer consultant to credit unions.
Thursday, May 2, 2024 at 8:00 am CT
Commentary prepared by Tom Slefinger, SVP, Director of Institutional Fixed Income Sales, Registered Representative of ISI*, Alloya Investment Services
Market Indications
Other Market Indicators
| Market Indicators | ||
|---|---|---|
| 2s/5s Tsy Spread | -0.31 | +0.01 |
| 2s/10s Tsy Spread | -0.31 | +0.01 |
| 2s/30s Tsy Spread | -0.33 | -0.04 |
| DJIA-30 | 37,903.29 | +87.37 |
| S&P-500 | 5,018.39 | -17.30 |
| NASDAQ | 15,605.48 | -52.34 |
| Dollar Idx | 105.63 | -0.60 |
| CRB Idx | 285.44 | -6.02 |
| Gold | 2,330.20 | +27.30 |
Daily Commentary
Market Recap – Stocks ended the day mixed after Federal Reserve Chair Jerome Powell largely ruled out that the central bank’s next move could be a hike, easing investor worries that it was losing control of sticky inflation. The Dow added 0.23%, the S&P 500 lost 0.34%, while the Nasdaq slid 0.33%. Treasury yields sunk with the 2-year dropping 8 basis points to 4.968%, the 5-year dropped 6 basis points to 4.66% and the 10-year yield finishing 4 basis points down at 4.641%. West Texas Oil (WTI) oil declined and gold rose.
The Federal Reserve held its ground on interest rates deciding not to cut as it continues a battle with inflation that has grown more difficult lately. In a widely expected move, the U.S. central bank kept its benchmark short-term borrowing rate in a targeted range between 5.25%-5.50%. The Federal Open Market Committee did vote to ease the pace at which it is reducing bond holdings on the Fed’s mammoth balance sheet "a.k.a. quantitative tightening", in what could be viewed as an incremental easing of monetary policy. Fed Chair Jerome Powell noted a “lack of further progress” in getting inflation back down to the central bank’s 2% target as a reason for today’s Fed rate decision.
The Bureau of Labor Statistics Job Openings and Labor Turnover Survey, known as JOLTS, reported job openings fell in March to the lowest level in three years while quits and hiring slowed, indicating more softening in the labor market. Available positions decreased to 8.49 million from an upwardly revised 8.81 million reading in the prior month, lower than estimates.
ADP reported that companies added 192,000 workers for the month, better than the consensus outlook of 183,000, though a slight step down from the upwardly revised 208,000 in March. At the same time, the firm’s wage measure showed worker pay up 5% from a year ago, a multiyear low. Job gains were strongest in leisure and hospitality. Other industries showing gains included construction and sectors covering trade, transportation and utilities as well as education and health services.
Home-price gains accelerated in February as the Case-Shiller Home Price Index rose 6.4% in February from a year earlier, a bigger increase than the 6% registered in January. On a monthly basis, the index advanced a seasonally adjusted 0.4% in February. The Case-Shiller 20-city index also jumped in February, to an annual gain of 7.3%, up from January’s 6.6% rise. Of the 20 cities, San Diego saw the biggest increase in home prices in February, a steep 11.4% rise, followed by Chicago and Detroit.
The Institute for Supply Management’s manufacturing gauge fell 1.1 points to 49.2, after expanding a month earlier. U.S. factory activity contracted in April on declining demand while input prices rose at the fastest pace since inflation peaked in 2022. A gauge of production fell 3.3 points in April after a large gain a month earlier, while a measure of new orders slipped back into contraction territory.
U.S. crude oil fell below $80 a barrel Wednesday for the third straight day of losses, as hopes for cease-fire in Gaza and growing concerns about the future course of interest rates in the U.S. weighed on prices. U.S. crude oil is now off 8% from its intraday high for the year of $87.67, when traders bid up prices on fears that Iran and Israel were on the brink of war.
The day ahead – Treasury yields have backed up a bit and stock futures advanced this morning as all eyes are looking ahead to more economic data on weekly jobless claims, first-quarter worker productivity and unit labor costs, as well as March figures on the trade deficit and factory orders. Those releases all come ahead of Friday’s closely watched April jobs report. Today’s quarterly earnings reports are dominated by Apple and Amgen after the close.
Have a great day!
Economic Calendar
April 29 - May 3, 2024: The Week Ahead
Future Fed Expectations
Source: Bloomberg
| Select Probabilities based on the Futures | |
|---|---|
| Probability of Fed Funds rate CUT on May 1. 2024 | -2% |
| Probability of Fed Funds rate CUT on June 12, 2024 | -11% |
**All quoted rates are indications and are subject to change without notice.
* ISI is a member of the FINRA/SIPC.
The information contained herein is prepared by ISI Registered Representatives for general circulation and is distributed for general information only. This information does not consider the specific investment objectives, financial situations or particular needs of any specific individual or organization that may receive this report. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities. All opinions, prices, and yields contained herein are subject to change without notice. Investors should understand that statements regarding future prospects might not be realized. Please contact Alloya Investment Services to discuss your specific situation and objectives.