For once, the always important jobs report could be treated just like any other run-of-the-mill economic report in the week ahead.
Instead, the flurry of activity in Congress before it takes spring break, and President Donald Trump's first formal meeting with Chinese President Xi Jinping top the list of what market pros are watching. There are also minutes from the last Fed meeting, and auto sales, important after a slowdown in consumer spending last month.
"Employment is always a focus, but my guess is it's going to be soft, relative to trend because of the weather, and nobody's going to care because it's a weather story if it's weak," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank. The jobs report is always seen as the single most important data point for the Fed, but the Fed is not expected to raise interest rates again until June, after two more employment reports.
Friday's March employment report is expected to show 180,000 nonfarm payrolls were added, well below the roughly 235,000 in both January and February. The unemployment rate is expected to remain at 4.7 percent, and average hourly wages are expected to rise 0.3 percent.
LaVorgna said he is instead more concerned about what goes on in Washington, with Congress winding down before its spring break. "It's more important to me what they say about the continuing resolution. They'll have about four days to extend it when they return," he said.
The continuing resolution to fund the government is the next big test for Congress after it failed to vote on replacing Obamacare last week. It now needs to reach agreement on a spending package to avert a government shutdown by April 28. "That's why the rumblings from D.C. are more important than the data," said LaVorgna.
Wells Fargo Investment Institute chief international investment strategist Paul Christopher says the meeting between President Donald Trump and Chinese President Xi Jinping tops his list.
"The China meeting is newer news. The jobs report is still important. We've been saying the market will focus on the wage gains," he said.
Christopher said the meeting will be the first real look at the Trump administration's trade dealings with China, a topic that has concerned but not really affected the market.
"It's going to be an important signal that he comes out of these negotiations or talks [looking like] he's open minded. If he's getting ready for a 30 or 40 percent tariffs on Chinese goods, then look out. Then he's already made up his mind," said Christopher.
Christopher said he doesn't expect a trade war, but it's important that Trump shows there could be constructive talks.
Economists are also watching Monday's vehicle sales to see if they hold up above 17 million, especially after Friday's consumer spending report showed a disappointing 0.1 percent gain in February.
"The employment report will be important, but I'd say the key for us right now is auto sales. The other data already looks pretty strong. The ISMs look pretty good. It's the combination of the trade data and the auto data, and what it says about the health of the consumer which will be important for us," said Michael Gapen, chief U.S. economist at Barclays. He said consensus is for 17.4 million annual selling rate for March vehicle sales.
"The consumer spending in Q1 looks awfully soft. You can make an argument that some of the firming in headline inflation is just mechanically eating into real spending. I think there's also delayed tax rebates that may be a factor," said Gapen. "Autos is another part of the story." He said a slowdown in car sales from 18 million last year is not a reflection necessarily of weaker households. "Our hypotheses was that automakers for a time preferred to keep production elevated a the expense of margins. Consensus is around 17.4 million. I would say if it's in the low 17s, it's still a good number."
Gapen also expects the March jobs report to be stronger than consensus, with nonfarm payrolls of 200,000.
The Fed releases minutes of its last meeting Wednesday afternoon, and economists will be watching that for any clues on what it plans to do with its balance sheet. The Fed has a nearly 4.5 trillion balance sheet, including securities it has been buying as part of the extraordinary programs put in place during the financial crisis.
The Fed replaces mortgage securities and Treasurys with new purchases when those securities run off. But it has discussed ending that program at some future data, as it normalizes interest rates. The market is increasingly interested in the timing since any reversal of the program by the Fed could impact interest rates as a greater amount of securities stay on the market.
There are also a number of Fed speeches in the coming week, including New York Fed President William Dudley who got the market's attention Friday when he said the Fed could 'taper' it's purchases later this year or in 2018.
"It wouldn't surprise me if sometime later this year or sometime in 2018, should the economy perform in line with our expectations, that we will gradually start to let securities mature rather than reinvest them," Dudley said in an interview with Bloomberg.
The amount of securities the Fed is buying will pick up significantly next year, if it continues the program. That's when about $422 billion in Treasurys are slated to roll down, more than double the $195 billion this year. About $2.45 trillion of the Fed balance sheet is Treasurys. Repayment for the $1.7 trillion in mortgages held by the Fed is more difficult to predict since there are prepayments.
That will also be a topic of interest when a number of Fed speakers once more take to the circuit in the week ahead. There are two events with Dudley, including a press briefing Monday.
Stocks closed out the first quarter Friday with solid gains. The S&P 500 was up 5.5 percent at 2,362, and the Dow was was up 4.6 percent at 20,663. The Nasdaq was the outperformer, up 9.8 percent to 5,911.
What to Watch
Monthly vehicle sales
9:45 a.m. Manufacturing PMI
10:00 a.m. ISM Manufacturing
10:00 a.m. Construction spending
10:30 a.m. New York Fed President William Dudley press briefing
3:00 p.m. Philadelphia Fed President Patrick Harker
5:00 p.m. Richmond Fed President Jeffrey Lacker
8:30 a.m. Trade deficit
10:00 a.m. Factory orders
4:30 p.m. Fed Gov. Daniel Tarullo
8:15 a.m. ADP payrolls
9:45 a.m. Services PMI
10:00 a.m. ISM non-manufacturing
2:00 p.m. Fed minutes
8:30 a.m. Jobless claims
8:30 a.m. Employment report
10:00 a.m. Wholesale trade
12:15 p.m. New York Fed's Dudley speaks on financial regulation
3:00 p.m. Consumer credit