In a note to clients, Bill O’Donnell, head of U.S. Treasury strategy at RBS Securities, points to what seems like a good sign for the economy: more trucks than he’d seen in months on the highway during his morning commute to work today.
“I’ve mentioned before that my commute to work takes me on one of the busiest highways (I-95) in the U.S. that sews together all of the states between Florida and Maine,” says O’Donnell.
“This morning’s commute saw more trucks on the highway than I have seen in months. Indeed, even at 4:40 a.m. it was tricky to change lanes because a train of trucks was even travelling in the third lane where they are not supposed to be. So it seemed pretty clear to me that the much-anticipated spring rebound is now in full force. Many of the trucks appeared to be carrying building materials and fabricated metal goods. It was an impressive sight; frustrating and frightening as it was to be a little car in a sea of semis.”
The “weather question” has been hanging over the market in recent months as economic data have come in below expectations. How much of the deterioration has been due to weather?
David Woo, head of global rates and currencies research at BofA Merrill Lynch, calls it “the most important chart in the world.”
“There is nothing more important right now than U.S. data over the next 4-6 weeks,” says Woo.
“The weather hypothesis will either be proved right or wrong. I am still in the weather camp and think that the post-winter U.S. bounce will be stronger than the market currently expects.”
The March nonfarm payrolls (NFP) report, released by the U.S. Bureau of Labour Statistics last Friday, showed a return to trend job creation after a few months of weakness, but did not reveal the “snap back” in hiring that many analysts were expecting.
Market participants are thus still waiting for a resolution to the debate.
“Data-wise, the next big thing is retail sales on Monday — expectations are for a high print both on headline and control, so the bar for a game-change is high,” says Steven Englander, global head of G10 FX strategy at Citi.
“That said, occasionally the combination of headline month surprise and revisions is powerful enough to fundamentally change the picture, but the frequency of such acute revisions is much less than with NFP. The April 30 FOMC seems less important now than the May 2 NFP given the paucity of heavy-duty data before then.”
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