Market Insider

After Friday's jobs shocker, this is what you need to watch

Kudlow: Cut corporate tax, then Fed can hike
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Kudlow: Cut corporate tax, then Fed can hike
Maturing markets?
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Maturing markets?
Jobs number won't sway fed: Pro
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Jobs number won't sway fed: Pro

With the Fed appearing to be even more sidelined, traders will scratch for clues on interest rates in the words of Fed speakers and economic data in the week ahead.

Market expectations for a rate hike this year were fading, after Friday's disappointing April jobs report came in at 160,000 nonfarm payrolls, 40,000 short of forecasts. That slower job growth pace departs from the more recent 200,000 plus level, and potentially signals a new era of slower job growth, economists said.

Read MoreJob growth shifts to slower gear along with economy

Job seekers wait in line to speak with company representatives during a Choice Career Fair event in Seattle.
Mike Kane | Bloomberg | Getty Images

Retail sales will be a key piece of data Friday, and there is also consumer sentiment and PPI inflation data that day. The Fed has said its rate decision will be dependent on the economic data, but the jobs report raises more questions of whether the lower growth pace is more due to the fact that so many jobs have been created or because the economy is just growing slower.

When Fed speakers hit the circuit this week, it's unlikely they will be orchestrating their message and their policy plans won't get any clearer. "It's the Fed speak we've got to watch, although I think we'll see more dissidents than a symphony," said Diane Swonk, CEO of DS Economics. "It's a big week for data. I'm not sure it will clarify, it will probably just confuse given the range of speakers we get from the Fed."

The Week Ahead: Retailers ready to report
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The Week Ahead: Retailers ready to report

New York Fed President William Dudley, closely aligned with Fed Chair Janet Yellen, speaks before the bell Tuesday from Europe, while hawkish Cleveland Fed President Loretta Mester and Kansas City Fed President Esther George speak Thursday.

Earnings season is winding down, but a few big names will report in the coming week including Disney and retailers, Macy's, Kohl's and Nordstrom.

Ron Sanchez, chief investment officer at Fiduciary Trust Company International, said the message from the jobs report Friday was that the Fed would take its cue from the incoming data, and that the trajectory for growth and interest rates was now lower for longer. "Our view of their interpretation of [the payrolls] number would continue to argue for patience," he said. "I don't think [the jobs] number was a big deciding factor, but I think for more members, it's a big wait and see."

Read MoreRate hike odds plunge after April jobs report badly misses estimates

As for the markets, Sanchez said he is not negative on stocks but he expects some choppiness because of consolidation after the rebound from February's lows. "We're not bearish or negative. I just see it as a challenging environment. I don't expect an economic recession. I don't expect a bear market. I just think we're in a challenging environment," he said.

Some of the coming week's action may result from the bond market itself, where there are expectations for a massive wave of corporate deals issuance, including a sizable debt offering from Kraft Heinz and some other merger and acquisition related issues. According to Informa Global Markets, there are about $49 billion in deals that might be proposed, one of the largest preliminary calendars ever. The largest amount of investment grade debt issued in a week was $66.6 billion in September, 2013 and only $40 billion of that hit the weekly calendar ahead of time.

On Friday, Treasury yields initially moved lower on the jobs report but rose throughout the day. Strategists said the market was building in a concession ahead of the burst of deal activity. At the same time, the Treasury is auctioning more than $60 billion in three-year and 10-year notes and 30-year bonds in the coming week.

Read MoreTop stocks of the week and how to trade them

What to Watch

Monday

Earnings: Teva Pharma, Sotheby's, Hertz Global, Rackspace, Liberty Broadband, SolarCity, InvenSense, International Flavors and Fragrances

5 a.m. Chicago Fed President Charles Evans

1 p.m. Minneapolis Fed President Neel Kashkari

3 p.m. San Francisco Fed President John Williams

Tuesday

Earnings: Disney, Electronic Arts, Nuance Communications, Planet Fitness, Norwegian Cruise Lines, Nokia, Dean Foods, Credit Suisse, Soda Stream, Lumber Liquidators

3:15 a.m. New York Fed President William Dudley

6 a.m. NFIB survey

10 a.m. Wholesale trade; JOLTs

1 p.m. $24 billion three-year note auction

Wednesday

Earnings: Macy's, Wendy's, Nissan, Toyota, Allianz

1 p.m. $23 billion 10-year note auction

2 p.m. Federal budget

Read MoreStrategist's signal with perfect track record flashing 'buy'

Thursday

Earnings: Kohl's, Nordstrom, Shake Shack, Nvidia, Party City, Ralph Lauren

8:30 a.m. Initial claims; import prices

11 a.m. Cleveland Fed President Loretta Mester

11:45 a.m. Boston Fed President Eric Rosengren

1 p.m. $15 billion 30-year bond auction

1:30 p.m. Kansas City Fed President Esther George

Friday

Earnings: Honda Motor, JC Penney, Brookfield Asset Management

8:30 a.m. Retail sales; PPI

10 a.m. Consumer sentiment; business inventories

6:25 p.m. San Francisco Fed's Williams

Read MoreWhy the jobs report could spur the next bull market in gold