06:28 AM EDT, 04/01/2024 (MT Newswires) -- US equity investors will focus on the labor market data due this week after the inflation measure that the Federal Reserve closely tracks signaled price pressures are still trending lower, increasing bets the central bank will kick off its easing cycle in June.

* Nonfarm payrolls on Friday will likely show the economy added 205,000 jobs in March compared with 275,000 in February, according to a survey from Bloomberg. But average hourly earnings is expected to have risen by 0.3%, which would be well above the 0.1% pace seen in February.

* The focus on jobs follows the February nonfarm payrolls that showed 75,000 more jobs were added than the consensus for 200,000, complicating the Fed's policy easing path. The increase in January was revised lower by 124,000 to 229,000, still a substantial number, and by 43,000 for December. Average hourly earnings grew at 0.1%, lagging the Street's 0.2% forecast.

* Investors' focus on jobs this week will follow the benign inflation data released on March 29, a public holiday for Good Friday. The growth in personal consumption expenditure deflator and core PCE slowed in February month over month. While year-over-year PCE growth increased, the core measure that the Fed pays particular attention to decelerated from a year ago.

* While headline and core inflation have settled in recent months "significantly" above the Fed's 2% target, "the loosening of labor market conditions, stable inflation expectations, and likely disinflation in rents to come all make us confident that inflation will still trend slightly lower over the course of this year," Michael Pearce, deputy chief US economist at Oxford Economics, said in the note on Friday. "That should be enough to give the Fed confidence to begin removing some of the policy tightness later this year."

* The probability the Fed will begin easing in June jumped to 66% as of early Monday versus 55% at the close on Thursday last week, according to the FedWatch tool.