TD Securities strategists highlight that recent movements in US rates were influenced by shifting headlines regarding the situation in Iran and month-end flows, with the US Treasury curve steepening on Friday. Rates rallied into the end of the day, driven by a 0.10-year month-end extension for Treasuries [1].
Looking ahead, TD Securities expects a data-heavy week to be crucial for the US Dollar and yields, with particular focus on the ISM Manufacturing index, nonfarm payrolls (NFP), ISM services, JOLTS, and ADP reports. The strategists forecast a soft NFP headline of 60,000 and anticipate the unemployment rate will edge higher to 4.4% [1].
For the ISM Manufacturing survey, TD Securities projects a gain in momentum for May, expecting a 1-point increase to 53.7 (consensus: 53.0), with a rebound in production as the main driver. The prices paid index is also expected to attract attention due to the ongoing oil shock, with higher input costs likely to continue influencing respondent comments [1].
Additionally, the Supreme Court is anticipated to hand down decisions on Thursday, which could add to market volatility. Overall, the focus remains on how these data releases and developments will impact the US Dollar and Treasury yields in the coming days [1].
CONCLUSION
The upcoming week is set to be pivotal for the US Dollar, with key economic data releases and the ISM Manufacturing index in focus. TD Securities anticipates a soft jobs report and higher unemployment, while rising input costs and oil prices could further influence market sentiment. Investors are likely to closely monitor these developments for their impact on US yields and the broader market.