An already much discussed Federal Reserve meeting and a heap of new economic data, including monthly employment figures, will give US government securities investors plenty to trade on in the coming week. Monday brings reports on September construction spending (forecast -0.3 percent) and ISM manufacturing, the latter expected to reflect expansion for the second month in a row.
Wednesday brings the ISM non-manufacturing index and the ADP national employment report for October. A weekly report on the newly jobless arrives on Thursday and on Friday comes October's key non-farm payrolls report, expected to show those payrolls shed 175,000 jobs in October, fewer than the 263,000 jobs lost in September.
A potentially pivotal event for the market, the Federal Reserve's two-day policy meeting, ends on Wednesday with a policy statement that investors will promptly put under a microscope. At issue is whether more hawkish members of the Federal Open Market Committee (FOMC), the Fed policy committee, will manage to make the statement slightly less dovish by removing the word "extended" from the Fed's current commitment to keep interest rates low for an extended period.
Others, such as Fed Vice Chairman Donald Kohn, maintain that with unemployment likely to go above 10 percent and many US factories idle, the greatest risk to the outlook is a loss of momentum, not inflation. Concerns about a "double-dip" in economic activity some time next year might be exaggerated, however, said Deutsche Bank Securities chief US economist Joseph LaVorgna in New York.
There have been only three episodes in US business cycle history when the economy lapsed back into recession within a year of the previous recession ending, he said. The Fed's statement next week could retain the "extended period" phrase or go back to the language they had earlier in January which was just to keep rates low without specifying for an extended period.
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