Market Commentary

Updated on May 1, 2024 10:09:13 AM EDT

April’s ADP Employment report kicked-off today’s activities at 8:15 AM ET. It showed 192,000 new private-sector jobs were added to the economy last month. This was closer to the higher end of the range of predictions, but an upward revision to March’s number (184k to 208k) means we still saw the expected monthly decline. Since the total number of new jobs was higher than predicted, we have to label the report neutral to slightly negative for mortgage rates.

That was followed by the Institute for Supply Management’s (ISM) manufacturing index at 10:00 AM ET. They announced a reading of 49.2 that fell short of the 50.1 that was expected and breaks a threshold that indicates slowing manufacturing activity. Anything below 50.0 is considered to be recessionary, making the index good news for bonds and mortgage rates.

This afternoon’s Fed events begin with the FOMC meeting adjourning at 2:00 PM ET. There is practically no chance of Chairman Powell and friends altering key short-term interest rates today. Inflation appears to have strengthened this year, so it is premature to make a rate cut at this time. While there is some discussion from a few market professionals that the Fed may need to make another rate hike before starting to reduce those rates if inflation doesn’t start to trend lower again, it is a safe bet that it won’t happen now.

With a change in short-term rates likely not happening today, market traders will be focusing on the 2:00 PM ET post-meeting statement and 2:30 PM press conference with Chairman Powell for hints of what the Fed’s next move may be and when it may come. This meeting does not include revised Fed economic projections.

It wasn’t too long ago that market participants and analysts were predicting the Fed would make their first rate cut at this meeting. That was pushed further and further later in the year as inflation numbers were coming in stronger than expected. Reassurances that rate cuts will still come this year would be favorable news for bonds and mortgage rates.

There are three moderately important economic reports set for release tomorrow morning before Friday’s release of the almighty monthly Employment report. They will be addressed in this afternoon’s update to this report that will be posted shortly after the markets have an opportunity to react to the FOMC events.