In the news this week (January 31 - February 4, 2011)

The markets will continue to watch the political unrest in Egypt closely this week. In addition, a number of high-impact reports will hit this week with the big news coming on Friday. We’ll discuss the impact of these reports in next week’s newsletter.

• We started the week off right away Monday morning with reports on Personal Spending and Personal Income, as well as the Personal Consumption Expenditures (PCE) Index, which is the Fed's favorite gauge of inflation. 
• Manufacturing was also in the news this week. On Monday, we saw the Chicago PMI, which surveys more than 200 Chicago purchasing managers about the manufacturing industry and is a good indicator of overall economic activity. Then on Tuesday, the ISM Index was released. This is the king of all manufacturing indices and is considered the single best snapshot of the factory sector. 
• The big topic of the week will be employment. First up was the ADP National Employment Report on Wednesday, which measures non-farm private employment. 
• The ADP report will be followed by another round of Initial Jobless Claims on Thursday. In last week’s report, Initial Jobless Claims came in well above expectations. We shouldn’t read too much into that spike, since weather could have played a sizable role in the jump. However, if readings over the next couple weeks don't settle back down closer to the 400,000 level, there may be reason for concern. 
• Finally, the busy week culminates in the all-important Jobs Report on Friday. This report features new data regarding non-farm payrolls, the average work week, hourly earnings and the unemployment rate. Needless to say, this report can be a big market mover.

As you can see in the chart below, bonds received a bit of a bump at the end of last week, helping home loan rates recover from losses earlier in the week. This boost was prompted by political turmoil in Egypt that had investors seeking the safety of bonds.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday, January 28, 2011)

Economic calendar for the week of January 31 – February 4, 2011

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