Today, less than three quarters of traders expect the Fed to raise interest rates at its next meeting. The rest expect a pause. Following the March jobs data, there was a marked shift in expectations. The expectations were set before the March jobs numbers. They could be cut or paused. Tomorrow’s data could potentially shift those expectations substantially again. That market price change could impact the dollar and the commodities that are priced in it.
Although Friday’s jobs figures were better than expected, they were still in line to forecasts. The underlying components showed a negative adjustment of birth-deaths which suggests that the actual number would have been greater. All in all, the jobs numbers showed that the labor market was still tight and that the recent episode of bank problems had not yet affected the economy.
Wednesday’s data could change all that
The inflation figures will be first to be published. They are heading in different directions once again. This could cause some market volatility, since the reaction of the headline figure to the core rate is different. When it comes to investors, overall CPI is an important factor.