(Bloomberg) — Stock markets were on a roll this week after explosive jobs data suggested the U.S. economy will continue to lead U.S. companies, even if it means higher interest rates are still possible. have finished.
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Stocks rose after a tough few days, marking the S&P 500's worst week of the year. Wall Street on Friday called for glass-half-full considerations, based on the assumption that if the economy remains this strong, there will be no real urge for the Federal Reserve to ease policy. It was determined.
This triggered hawkish repricing in bond markets. Treasury yields have been rising as traders cut bets on a rate cut in June or July, suggesting they see fewer than three cuts this year as more likely. The dollar rose against all of the developed world.
Government data on Friday showed employment rose by 303,000 people in March, exceeding all expectations. The unemployment rate fell slightly to 3.8%, wages grew steadily, and the labor participation rate rose, highlighting the strength of the labor market that drives the economy.
The S&P 500 rose to about 5,180, and the tech-heavy Nasdaq 100 rose nearly 1%. The yield on the 10-year U.S. Treasury note rose 4 basis points to 4.35%.
Wall Street's reaction to hiring:
This morning's explosive jobs report shows that the economy shows no signs of slowing and that consumer spending should be able to hold up in the short term.
This good news is bad news for the bond market — the Fed is likely to cut rates sooner and less frequently, and the first rate cut may not be seen until July — but for the stock market. could be good news.
There is no weakness in the job market that would prompt the Fed to cut rates quickly, but there are also no signs of tightness that would prevent the Fed from cutting rates. The Fed's decisions at upcoming meetings will largely depend on inflation data.
Good report from a basic perspective. I still think next week's inflation rate will be extremely important.
I'm still expecting a rate cut in June, but I'm waiting for Wednesday's CPI report to show. From a fundamental policy perspective, the economy is still very strong, so there is little need to start cutting interest rates.
Oops, I did it again. Today's employment report showed that the labor market again exceeded expectations.
Overall, the report itself does not change the Fed's rate cut plans, but together with other information it argues for only two rate cuts in 2024, rather than the three currently expected. may be used for.
Another strong jobs report suggests the economy is strong and far from recession. Ultimately, this will postpone any rate cuts by the Fed, but slower wage growth means we're not in the midst of a labor market-induced inflation spike.
This is a robust labor economy that shows little sign of slowing down in the near term. What do interest rates mean? There is even less reason for the Fed to feel any urgency to announce its long-awaited first rate cut.
While a strong last-minute employment report would mean there is little need for the Fed to make cuts, given the cooperative wage situation, it is unclear how much of an impact the latest employment report is likely to have on the Fed's thinking. Limited or limited. Next week's inflation data will be more important in this regard.
There are many things worth noting about the March employment report. The economy continues to show remarkable resilience, defying concerns of high interest rates and a significant economic slowdown.
Fed officials can remain confident that they are meeting the maximum employment element of their dual mandate. The big question is when and if it can start cutting rates in the fight against inflation.
The stronger-than-expected and glowing reports have raised questions about the timing of the Fed's first rate cut, but continued strength in the labor market remains encouraging for the economy. Additionally, wage pressures were in line with expectations, offering some relief amid a hot report.
Friday's better-than-expected jobs report suggests the economy will remain resilient in 2024 despite rising interest rates and diminished expectations for the Federal Reserve to cut rates this year. The fact that the labor market is so strong shows that businesses and the economy are adapting to high interest rates.
Consistent with some recent data, the economy is strong and going from strength to strength. A rate cut in June may be at risk, but perhaps next week's CPI data will be a bigger litmus test for the Fed. The Bears haven't won yet.
The projected headline numbers above of over 300,000 indicate continued strength in the labor market. However, given that average hourly wages are in line and participation rates are up slightly, it's no longer overheated.
We still believe the Fed will begin cutting insurance later this year to make a soft landing a reality. Especially given that some of the recent data outside of payroll points to a decline in macro momentum.
Stop me if you've seen this headline before. But once again we are seeing massive job losses. The reason for the beat at this point is irrelevant; the main point is that the Fed is once again in an impossible position. The interest rate lifeboat we all expected has drifted further and further away to be seen, and we remain on the vast plateau for a longer period of time.
Given the underlying strength of the economy, the Fed may need to reconsider its current stance of cutting interest rates three times this year. But the reason this change in attitude is likely is that we are bullish. The economy is doing well and is allowing interest rates to rise more than most expected.
In the short term, there will be growing concerns that further inflationary pressures will lead to the Fed raising interest rates. However, in the medium term, this is another sign of a healthy economy with no signs of recession. Another blockbuster NFP puts the Dovs on the back foot once again. Why does the Fed need to cut interest rates when the job market is so strong and inflation is resilient?
The employment report was better than expected, but as the unemployment rate and average hourly wage matched, there was no major change in expectations for a June interest rate cut, which remains at around 60%. In addition to the good news from the jobs report, increased participation and average hours worked could boost real incomes and spending in the economy without spurring inflation.
Today's big upside surprise in the jobs report may not have closed the door on a June interest rate cut, but there is a little less daylight than the day before. This will make next week's CPI and PPI even more important. Stock markets have ignored almost all the troubling data that has come their way in recent months, but a third consecutive month of better-than-expected inflation numbers could undermine market confidence in Fed policy. We plan to cut interest rates in the third quarter.
The labor market will remain resilient throughout 2024, and today's employment report continues that trend. Even after recent downward revisions, the report highlights the strength of the job market within the broader context of a U.S. economy that continues to largely resist the effects of rising interest rates.
Continued strength in the labor market and inflation remaining above the Fed's 2% target will likely support Powell's cautious approach to monetary easing.
Today's employment report was better than expected, showing strong demand in the labor market. The Fed recently signaled optimism on jobs by raising its long-term forecast for the so-called neutral, or Goldilocks, rate. A Goldilocks interest rate is one that is low enough to avoid hurting the economy and increasing unemployment, but high enough to keep inflation in check.
Incredibly strong jobs numbers have sent the bond market into a panic over whether the Fed will hold off on cutting interest rates. I keep scratching my head as to why so many people are deciding to get a job now when there have been millions of job openings for at least a few years. The economy didn't suddenly create these jobs. So the people who are coming into the workforce are going to need those jobs. So I'm cautious about how strong the jobs report actually is for the economy.
A quarter-point decline is expected in the third quarter and a half-point decline in the fourth quarter.
Company highlights:
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Tesla is lowering the prices of its best-selling cars as it clears its largest inventory ever.
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The company is reducing prices on its in-stock Model Y sport-utility vehicle, with the rear-wheel-drive version costing $4,600 less than the cost of custom-ordering the sport-utility vehicle. Long-range and high-performance Model Ys are discounted by at least $5,000.
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Johnson & Johnson has agreed to acquire Shockwave Medical Inc. for an enterprise value of approximately $13.1 billion to strengthen its expansion into manufacturing medical devices used to treat heart disease.
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Apple Inc. has laid off more than 600 employees in California as part of its decision to end its car and smartwatch display projects, according to a filing with the California Employment Development Department.
The main movements in the market are:
stock
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As of 10:12 a.m. New York time, the S&P 500 was up 0.6%.
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Nasdaq 100 rose 0.8%
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The Dow Jones Industrial Average rose 0.3%.
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Stoxx European 600 drops 1%
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MSCI World Index little changed
currency
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Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.3% to $1.0808.
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The British pound fell 0.3% to $1.2603.
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The Japanese yen fell 0.1% to 151.54 yen to the dollar.
cryptocurrency
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Bitcoin fell 0.1% to $67,865.29.
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Ether fell 0.8% to $3,299.9.
bond
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The 10-year Treasury yield rose 4 basis points to 4.35%.
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Germany's 10-year bond yield rose 1 basis point to 2.37%.
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The UK 10-year bond yield rose 3 basis points to 4.05%.
merchandise
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West Texas Intermediate crude oil is little changed.
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Spot gold rose 0.5% to $2,302.39 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Natalia Kniajevic.
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