Coffee With Greta: Hot Labor Market

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Editor's Note: Coffee With Greta will be on pause until mid-July as Greta takes maternity leave to bond with her new baby.

 

DJIA Futures: +148 (+0.4%)

SPX Futures: +26 (+0.5%)

NASDAQ Futures: +103 (+0.6%)

Good morning friends!

Futures are holding onto gains despite the release of a hotter-than-expected jobs report.

Let’s get right to it!

Hot Job Growth

The U.S. labor market is still running hot. 

The Labor Department reported the economy added 303,000 jobs in March vs 200,000 expected.

But looking deeper into the report, the rest of the numbers are mostly in line with expectations. 

The unemployment rate dipped as expected to 3.8% from 3.9% from previously. 

Average hourly earnings, which are in focus as the Fed looks for signs of cooling inflation, rose 4.1% year over year. 

That was down from 4.3% in February and in line with estimates. 

The labor force participation rate rose to 62.7% from 62.5% in February vs 62.6% expected.

February’s job growth was revised lower by 5,000 to 270,000 while January was revised higher by 27,000 to 256,000. 

Yields Pop

Treasury yields are popping this morning after the release of that jobs data. 

The 10-year yield is up seven basis points to 4.39% while the 2-year yield is six basis points higher at 4.72%.

CME Group’s FedWatch Tool shows traders starting to dial back rate cut expectations.

Just 50.7% now say they expect the first cut at the June meeting, down from over 70% last week.

Kashkari Spooks Market On Rates

Minneapolis Fed President Neel Kashkari spooked markets on Thursday with comments about zero rate cuts in 2024.

During an interview, Kashkari said, “If we continue to see inflation moving sideways, then that would make me question whether we need to do those rate cuts at all.”

His comments come after several other Fed officials, including Chairman Jerome Powell, spoke this week and said more evidence is needed on cooling inflation. 

The next piece of important data after today’s jobs report will be the March CPI and PPI next week. 

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