Market response to ADP's report on private payrolls is about as "hit or miss" as its short term correlation with NFP private payrolls component. Interestingly enough the biggest surprises in ADP numbers have tended to coincide with the biggest market reactions only to be met with the biggest departures from the broader trend of correlation with NFP three days later.
Did that make any sense? Let's break it down... No question that there's a strong positive correlation between the two metrics:
In other words, if ADP is roughly in line with expectations, markets tend not to care too much. Even if the variation is moderate, it still flies under the radar to a large extent. On those "normal" occasions, it usually turns out that NFP Private Payrolls are similarly close to expectations. But on occasions where ADP Payrolls are much higher or lower than expected, that's when we see markets react the most.
It makes sense that this would be the case considering the logical inference: "Oh my... perhaps we're not accurately anticipating NFP numbers 2 days from now... We better adjust." It's on THOSE occasions where NFP seems to defy ADP's suggestion to the greatest extents. Do we have objective data to back this up? Not really, but the cousin of a friend of ours said that his stock-broker once worked with a bond trader who said that this sort of stuff happens ALL the time... Seriously though... It happens.
There are a few other things that are happening today as well. Once again, we get plenty of Fed-Speak, and once again, we don't expect any of it to be of any earth-shattering importance to bond markets. Of course there's the 7am MBA Mortgage Apps, but that's more of curiosity than the sort of thing we'll rush to the edge of our seats for, especially that early in the morning.
If anything, yesterday's session confirmed that markets are willing to move the needle in measured doses ahead of Friday's NFP, but that the biggest swings are reserved for the main event itself. Of course there is always the possibility that it turns out to be some sort of sideways non-event, or that something happens between now and then to cause a big enough swing to take notice, but we can't emphasize enough how big the potential movement is considering the recent EXTREME determination for bond markets to go sideways.
Week Of Mon, Apr 30 2012 - Fri, May 4 2012 |
||||||
Time |
Event |
Period |
Unit |
Forecast |
Prior |
Actual |
Mon, Apr 30 |
||||||
08:30 |
Personal consumption mm |
Mar |
% |
+0.4 |
+0.8 |
+0.3 |
08:30 |
Personal income mm |
Mar |
% |
+0.3 |
+0.2 |
+0.4 |
09:45 |
Chicago PMI |
Apr |
-- |
61.0 |
62.2 |
56.2 |
Tue, May 1 |
||||||
10:00 |
Construction spending |
Mar |
% |
0.5 |
-1.1 |
+0.1 |
10:00 |
ISM Manufacturing PMI |
Apr |
-- |
53.0 |
53.4 |
54.8 |
Wed, May 2 |
||||||
07:00 |
Mortgage market index |
w/e |
-- |
-- |
697.7 |
-- |
07:00 |
Refinancing Index |
w/e |
-- |
-- |
3715.2 |
-- |
08:15 |
ADP National Employment |
Apr |
k |
179 |
209 |
-- |
10:00 |
Factory orders mm |
Mar |
% |
-1.5 |
1.3 |
-- |
Thu, May 3 |
||||||
07:30 |
Challenger layoffs |
Apr |
k |
-- |
37.9 |
-- |
08:30 |
Initial Jobless Claims |
w/e |
k |
380 |
388 |
-- |
08:30 |
Productivity |
Q1-P |
Pct |
-0.5 |
+0.9 |
-- |
08:30 |
Unit Labor Costs |
Q1-P |
Pct |
+2.8 |
+2.8 |
-- |
10:00 |
ISM Non-Manufacturing PMI |
Apr |
-- |
55.5 |
56.0 |
-- |
10:00 |
ISM N-Mfg Business Activity |
Apr |
-- |
57.9 |
58.9 |
-- |
Fri, May 4 |
||||||
08:30 |
Non-farm payrolls |
Apr |
k |
+170 |
+120 |
|
08:30 |
Unemployment rate mm |
Apr |
% |
8.2 |
8.2 |
|
* mm: month over month | yy: year over year | qq: quarter over quarter * (n)SA: (non) Seasonally Adjusted * PMI: "Purchasing Managers Index" |