Event Reminder | Get Ready for Feb. 3, 5 (Wed., Fri.)

S&P 500 INDEX -0.95%
NASDAQ -1.36%
Dow Jones Industrial Average -0.99%
ETF-S&P 500 -0.92%
PowerShares QQQ Trust,Series 1 -1.26%

S&P 500 INDEX

SPX

6025.99

-0.95%

NASDAQ

IXIC

19523.40

-1.36%

Dow Jones Industrial Average

DJI

44303.40

-0.99%

ETF-S&P 500

SPY

600.77

-0.92%

PowerShares QQQ Trust,Series 1

QQQ

522.92

-1.26%

This week is pivotal for global markets with key events slated to impact economic forecasts and investor decisions. 

From the US Treasury's new debt issuance plans to the January Non-Farm Payroll, ADP Employment Change and Unemployment reports and significant monetary policy movements. 

On Wednesday, Feb 5, 2025: 

Riyadh TimeEventPreviousConsensusForecast
04:15 PMADP Employment Change JAN122K150K120.0K
04:30 PMBalance of Trade DEC$-78.2B$-87B$ -93.0B
04:30 PMExports DEC$273.4B-$ 262B
04:30 PMImports DEC$351.6B-$ 355.0B
04:30 PMTreasury Refunding Announcement---

On Friday, Feb 7, 2025: 

Riyadh TimeEventPreviousConsensusForecast
04:30 PMNon-Farm Payrolls JAN256K170K205K
04:30 PMUnemployment Rate JAN4.1%4.1%4.1%
04:30 PMAverage Hourly Earnings MoM JAN0.3%0.3%0.3%
04:30 PMAverage Hourly Earnings YoY JAN3.9%3.8%3.9%
04:30 PMParticipation Rate JAN62.5%-62.5%

Here are the events to keep an eye on, and why those digits matter.

 

1/3

US Treasury's Borrowing Plan

 

Investors are anxiously awaiting the US Treasury’s announcement of its quarterly borrowing plan this Wednesday, which could have widespread repercussions for global markets. 

Analysts and market participants will particularly focus on the Treasury’s approach to long-term debt issuance. 

There are growing concerns on Wall Street that if new Treasury Secretary Scott Bessent substantially increases the issuance of long-term debt, it could elevate already high US Treasury yields, thereby increasing borrowing costs across the economy.

The Treasury is expected to go public with its new borrowing plan, and any hint towards increased long-term debt issuance may provoke market volatility. While it’s generally anticipated that there won't be adjustments in the issuance of intermediate and long-term Treasuries this quarter, analysts are wary about whether the Treasury will indicate potential scope for increasing issuance later in the year.

JPMorgan Chase analyst Jay Barry suggests the Treasury might alter previous statements considering future financing gaps but foresees no major changes before May. Conversely, Goldman Sachs analysts speculate that the Treasury might replace precise statements with more ambiguous language, hinting at current issuance sufficiency but leaving room for future adjustments.

With the Congressional Budget Office projecting a federal deficit nearing US$1.9 trillion for fiscal year 2025, the government will need to issue significant amounts of Treasuries to bridge the funding shortfall. Scott Bessent’s preference for increasing the proportion of long-term debt issuance raises anxiety about long-term Treasury supply and its impact on yields.

Market participants recall the August 2023 experience when the Treasury announced higher long-term debt issuance, pushing the 10-year Treasury yield close to 5%. This memory further amplifies current concerns. Analysts will scrutinize every word for hints of policy direction beyond stated plans.

 

2/3

Jan. Non-Farm Payroll, Unemployment

 

The upcoming January Non-Farm Payroll and Unemployment reports, set for release on Friday, February 7, are crucial events, too. 

This report is positioned uniquely amid the Fed’s pause on rate cuts, the uncertainties of President Trump’s policies, and divergent global central bank policies. Elevated policy implications are attached to the January job figures following a solid end to 2024, marked by consistently strong employment numbers and low Unemployment rates despite a shifting economic landscape.

Last month’s labour market data revealed robustness with an unexpected drop in the Unemployment rate to 4.1% from 4.2% and the addition of 256,000 jobs compared to the market's expectation of 160,000. This was a significant reason why the Federal Reserve decided to keep interest rates unchanged.

Looking ahead, analysts forecast the US economy to add approximately 205,000 jobs in January. 

The market expects the Unemployment rate to remain flat at 4.1%-4.2% after a rapid rise in 2024.

However, if the strong performance of the US economy during December repeats, this could lead to a higher-than-expected number, prolonging the period of current high interest rates. The nuanced interpretation of these figures will be crucial as Jerome Powell and the Federal Reserve navigate the decision-making process in the upcoming months.

 

3/3

What Factors Impact the Digits?

 

The Fed recently held rates steady, emphasizing economic strength, particularly in the labour market, and persistent inflation. 

Taimur Baig at DBS Bank expects trade, immigration, and fiscal policy noise to limit the Fed's monetary easing. He predicts forecasting challenges, preventing Fed action, with the final interest rate at 4%. Baig expects US GDP growth at 2% in 2025-2026, with inflation between 2.5%-3%.

US President Trump’s second term brings policy shifts, including potential cuts across the public service sector, and these changes add another layer of complexity to the economic outlook.

A robust increase in job numbers would support sustained higher rates, extending the timeline for potential rate cuts. Market sentiment reflects anticipation of two rate cuts in 2025, contingent upon economic indicators—particularly employment and inflation trends.

As of Feb. 3 at 22:10, the CME FedWatch tool shows that bond traders anticipate an 86.5% chance of maintaining rates by the Fed during the Mar. meeting. 

The Fed is closely monitoring inflation risk as the US personal consumption expenditure (PCE) price index released last week shows an increase of 2.6% YoY in December, excluding volatile food and energy items. Core PCE also rose 2.8% YoY, but shorter-term inflation is slowing. 

Every question you ask will be answered
Scan the QR code to contact us
whatsapp
Also you can contact us via