US job growth unexpectedly slowed in April. Today's NFP report showed that the US economy added only 266K jobs last month, well below analysts’ projections of 978K, and pushing the unemployment rate higher to 6.1%. Also March’s originally estimated total of 916k was revised down to 770k, though February saw an upward revision to 536k from 468k. US Treasury yields fall sharply after jobs report to 1.51%. The disappointing report reinforced the view of many investors that the recovery in the labor market still has a long way to go despite yesterday's data showing that initial jobless claims have fallen to their lowest level since the pandemic began.
The US NFP report for April turned out to be a massive disappointment. Source: Bloomberg
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Open account Try demo Download mobile app Download mobile appThe Fed will most likely use today's weak figures to maintain its current policy, indicating that there has been no significant progress in terms of the recovery in the labor market. Also it will be easier for Powell to repeat his dovish mantra, that any inflation will be temporary even despite the fact that in the light of the latest macroeconomic data these statements seem to be even less credible, (The ISM Services Index prices paid component reveals just how much prices are going up). Anyway NFP report hints that monetary policy tightening is still some time away. Markets are now pricing the first FED rate hike no earlier than mid-2023, therefore investors should not expect any breakthrough during the next Fed meeting or at the economic symposium in Jackson Hole.
Interestingly, yesterday the Fed published a financial stability report in which it warned about elevated high asset prices and associated risks. Nevertheless, the markets seem to have completely ignored these issues at least for now.
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