U.S Recap over the week / Hawkish Fed Speak / Week Ahead - Chair Powell's Speech | JOLTS | NFP

Over the week, US2s found support at the 4.75% level and US10s found support ahead of the 4.35% level. 

U.S Monetary policy is in a restrictive territory and Fed projections show 75 bps of rate cuts into 2024. Stickiness of Inflation and reaching the last mile of inflation is a dominant concern for the Federal Reserve and the same has resonated in the Fed Speak. Fed's Barkin commented "I am in no hurry to cut rates" as echoes by Fed Williams and Fed Bostic. However, the market paused repricing Fed Fund Rates over 2024 as the pricing largely converged with the Fed Projections. 

USD index languished between the 103.60 and 104.25 levels. Fed Fund pricing for rate cuts into 2024 largely hovered around the 80 bps mark over the week before slipping to 92 bps post the ISM Mfg Release with 25 bps of rate cuts fully priced into the June meeting. 

Yields	High	Low	Close	WoW ▲	Weekly Range
US 2Y	4.74	4.52	4.54	-16	23
US10Y	4.32	4.18	4.18	-7	14
US2s10s	-0.34	-0.45	-0.35	9	11
US30Y	4.45	4.32	4.33	-4	12

Over the week , Q4 US GDP was revised lower by 10 bps to 3.20%. The headline and core PCE prints were largely in line with estimates. Services inflation rose 0.60% mom while soft goods inflation especially non durable goods inflation kept the print in check. 

The 4Week Moving Average of continuing Jobless Claims continued to rise in the month of January. Core Durable Goods orders fell 0.30% mom. 

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2024 is 3.0% on February 29, down from 3.2% on February 27. 

In February, the U.S. manufacturing sector continued its 16-month contraction, with a PMI of 47.8% (from prior 49.10). Employment dropped to 45.9%, while 40% of manufacturing GDP contracted (down from 62% in January). Despite these challenges, some industries experienced growth, hinting at a tentative recovery. Supply chain issues persisted, impacting supplier capacities. Respondents noted increased sales but anticipated difficulties such as softness in global markets.

Snapshot	▲ YoY	▲ MoM	▲ 3M Change	▲ 6m Change
Headline PCE	2.40%	0.34%	1.82%	2.49%
Core PCE	2.85%	0.42%	2.60%	2.47%
Durable Goods	-2.36%	0.21%	-2.87%	-2.78%
Non Durable Goods	0.48%	-0.38%	-4.32%	0.66%
Services	3.90%	0.60%	4.62%	4.01%
Energy Goods & Services	-4.91%	-1.39%	-13.95%	3.15%
Headline CPI	3.11%	0.31%	2.80%	3.32%
Core CPI	3.87%	0.39%	3.92%	3.56%

Jobless Claims	IJC	CJB	4W MA CJB
Last Print	2,15,000	19,05,000	18,79,750
L-1 Print	2,02,000	18,60,000	18,77,500
WoW Change	13,000	45,000	2,250

Durable Goods Data	Last Print	Mom $ mn ▲	Mom % ▲	Exp
New Orders	277	-18	-6.1%	-4.50%
New Orders Excl Transportation	187	-1	-0.3%	0.20%
New Orders Excl Defense	260	-20	-7.3%
New Orders Transportation Equipment	90	-17	-16.2%

The week ahead will see the release of the 

05 Mar S&P Composite and Services PMI / Durable Goods and Factory Orders / ISM Non -Mfg PMI

06 Mar ADP Numbers / JOLTS Job Openings

07 Mar Jobless Claims data

08 Mar NFP numbers (est 190K) / Average Earnings (est 0.30% mom) and Average Workweek Hours (est 34.20). Remember, the last print showed stellar headline numbers but the employment situation showed reduction in labor force to the extent of 175K. 

As the week progresses, Chair Powell's in his update to the House Financial Services Committee and the Senate Banking Committee could choose to give direction on the monetary policy or not, but markets will be looking for cues. We then have the FOMC meeting on March 20th along with the Summary of Economic Projections. Will Fed dot plot shift to reflect 50 bps of rate cuts into 2024 as the data supports a soft landing or continue with 75 bps. What will be the guidance on Fed's balance sheet run off?