Jobs data looms over confidence
By Chris Reese
NEW YORK, March 30 (Reuters) - While Treasuries prices may get some support on Tuesday from weaker consumer confidence data, dealers say the March employment report later this week is still expected to have the biggest influence on the market.
Most dealers expect consumer confidence to retreat, under pressure from a variety of sources, when the Conference Board releases its confidence data on Tuesday.
"Not only is the labor market still soggy, but the recent well-publicized surge in gasoline prices is hurting optimism," Lehman Brothers' global economics research team said in commenting on its expectations on the consumer confidence data.
Confidence has also been undermined by presidential election campaign talk about job outsourcing and the lagging economy, as well as by security concerns after the train bombings in Spain earlier this month, Lehman Brothers said.
Most analysts expect consumer confidence will show a further erosion when March data are released at 10 a.m. EST (1500 GMT) on Tuesday, with the bulk of forecasts calling for an index of 86.5, down from the February index of 87.3, which was the lowest since October.
"We will be looking pretty closely at the consumer confidence data, as it is the one survey that actually asks about employment prospects," said Peter Kretzmer, senior economist at Banc of America Securities in New York.
However, the data's market impact is expected to pale in importance to the much-awaited employment data released on Friday, as the Federal Reserve Bank has indicated it will remain patient in raising interest rates from four-decade lows until the jobs picture shows signs of recovery.
"The market is realizing that the economy is strong enough that you can't write off the Fed (raising interest rates) in 2004, but the market is also very vulnerable, and if the jobs data is again disappointing, you could see some significant (price) changes," Kretzmer said.
The previous employment report at the beginning of this month showed an increase in payrolls far smaller than many expected, and reaffirmed for many dealers the view that the Fed will not have to raise official interest rates this year.
The disappointing jobs data helped to push bond yields to their lowest levels since July.
The market will have another reading on consumer confid
ence on Tuesday with the release of data from ABC News and Money Magazine's Consumer Comfort index for the week ended March 28, which is due at 6:30 p.m. EST (2330 GMT).
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