Tuesday, March 01, 2016

Wednesday: ADP Employment, Beige Book

by Bill McBride on 3/01/2016 07:01:00 PM

CR Note: Oops - lost a day somewhere ... corrected for Wednesday (HT Craig)

From Tim Duy: Dudley the Dove

The beleaguered manufacturing sector saw an uptick in February, at least according to the ISM report ... this information builds on the stronger consumer spending and inflation numbers we saw last week. Not to mention solid auto sales for February. The news is sufficiently good that Torsten Sl√łk of Deutsche Bank argues (via Business Insider) that the Fed should raise rates ...

I don't think the Fed will raise in March, nor do I think they should raise in March. I think the financial markets signaled fairly clear that further tightening now would be a mistake. The Fed would be wise to heed that call.

And, if New York Federal Reserve President William Dudley is any indication, they will heed that call. Indeed, he goes even further than me. Whereas yesterday I raised the possibility of a "hawkish pause" at the March meeting where the Fed revives the balance of risks with an upside bias, he opens the door to the opposite.
...
Bottom Line: The Fed will take a pass on the March meeting. Whether the statement is dovish, neutral, hawkish is the key question. Dudley opens up the possibility of a not just a neutral statement, but a dovish one. My sense is that this is shaping up to be a very contentious meeting as participants struggle with the question of exactly which data are they dependent upon.
Wednesday:
• At 7:00 AM ET, the The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:1`5 AM, the ADP Employment Report for February. This report is for private payrolls only (no government). The consensus is for 185,000 payroll jobs added in February, down from 206,000 in January.

• At 2:00 PM, the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.