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Market Commentary

Payroll Report Today



Posted on April 7, 2017


Today we get the payroll report, and given the Fed said in their minutes they believe the economy is at or close to full employment, the overall number will mean a lot less going forward. The focus will be on average hourly earnings.

 

Good morning!

  • The nonfarm payroll disappointed at 98k in March versus 219k in February and the 180k consensus…the net revisions was -38k…again, don't read much into the absolute number…we said we're going to get some of these lower prints
    • o The unemployment rate, although, fell to 4.5% from 4.7%, which was the consensus
    • o The labor participation rate remained at 63%
    • o The average hourly earnings were +0.2% for the month with an upward revision to February
      • Over the past year, this was as-expected at 2.7% vs. 2.8%...a downtick but still the upper-end of the range
    • o As we have mentioned from the start of the year, given we are hanging around the 4.7% level for the unemployment rate and initial jobless claims remain at historically low levels, the absolute number of jobs created will be much lower than we are used to (less than 100k) and the focus will be on earnings
  • • Yesterday
    • o Initial jobless claims were lower-than-anticipated at 234k vs. 259k the week prior
      • • The four-week moving-average dropped to 250k vs. 254.5k
      • • Continuing claims were below expectations at 2028k
  • Of course in other news, last night the US launched 59 Tomahawk missiles at the Syrian airbase
    • o The Syrian military reports at least 6 people were killed at the airbase, where some reports Russian personnel were on the ground
    • o Russia called the strike an "act of aggression," while Syrian claimed it will support and strengthen ISIS
    • o We'll have to see what transpires into more of a sustained action and the impacts on the markets
      • • So far this morning, the 10-yr fell to 2.32% and gold rallied ~1.5% or $12/oz
      • • Oil spiked, of course, to just under $53/brl
    • o Here is an article on the impact on certain assets
  • • Later today
    • o Fed's Dudley speaks on financial regulation, so much going on here
  • • In other news:
  • • Oil and gold little changed
  • • Treasuries
    • o 2-yr: 1.24%
    • o 10-yr: 2.32%
    • o 30-yr: 2.96%
  • • LIBOR
    • o 1-month: 0.99%
    • o 3-month: 1.16%
  • • Fed funds effective was 0.91%

Have a great weekend!!!

Fred

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