Risks to This Week's US Economic Data

Stocks are likely to start the week cautiously, ahead of Apple earnings, the FOMC Meeting and a slew of US economic data.   The Treasury market has the Treasury refunding announcement to contend with, as well.  However, the risks are for softer-than-consensus prints for most of the key US economic data, which could temper concerns about Fed policy and keep the markets in a range.  The FOMC Statement should maintain the message of gradual tightening path ahead.

The table below shows the risks associated with this week's key US economic data.  The March Core PCE Deflator has downside risk relative to consensus, because the high component of the CPI (owners' equivalent rent) has a smaller weight in the PCE Deflator while the weak component of the CPI (apparel prices) has a larger weight.  The April Mfg ISM risks a counter-consensus increase, since the early surveys (Markit and Phil Fed) rose.  But, theses are not reliable predictors.  The best predictor recently has been the Chicago PM, which come out on Monday and risks rebounding more than consensus after a low print in March.  The April ADP Estimate risks a below-consensus print, since it could be pulled down by the very weak March Payroll increase (the latter feeds into its model).  Q118 Unit Labor Costs look like it could come in below consensus, based on the parts of the GDP report.  Friday's April Nonfarm Payrolls risk a low print, as was the case last year.   The labor market components of the April Conference Board Consumer Confidence Survey weakened.  This is not a reliable predictor of the Unemployment Rate, but raises the risk that the Rate could rise or be steady.  Calendar considerations point to 0.1-0.2% m/m for Average Hourly Earnings, but layoffs in the retail sector could boost it for composition reasons.
                                         
Monday                               Consensus                         Risk Relative to Consensus
Core PCE Deflator                0.2% m/m                             0.1-0.2% m/m
                                              1.9% y/y                               1.8-1.9% y/y
Chicago PM                          +0.5 to 57.9                          higher

Tuesday
Mfg ISM                                -0.7 to 58.6                          m/m increase

Weds
ADP Estimate                        203k m/m                             lower

Thursday
Nonfarm Productivity             1.0% q/q  (saar)                   in line or lower
Unit Labor Costs                     2.9% q/q (saar)                   lower

Friday  
Nonfarm Payrolls                     195k m/m                          lower
Unemployment Rate                4.0%                                  4.0-4.1%
Avg Hourly Earnings               0.2% m/m                          0.1-0.2% m/m 
                                                 2.7% y/y                            2.6-2.7% y/y