In-line NFP Report Bolsters Fed Rate Hike Odds, Dollar has its day, Bitcoin unfazed

• European and US stocks markets are closed for Good Friday (Europe will stay closed on Monday)
• US Jobs Report raised odds of a Fed rate hike at the May meeting
• Dollar rallied, Bitcoin little changed
• In March, Charles Schwab acquired $53 billion in net new client assets

After a week full of softening labor market readings, today’s nonfarm payroll report showed hiring is not cooling as quickly as some where thinking.  The US jobs report was in-line with expectations, but it feels like a beat because so much of Wall Street was expecting a softer print.

The instant market reaction was dollar strength as Treasury yields surged around 10 basis points across both the 2- and 10-year Treasury yields.  The 2-year Treasury yield did a better job of holding onto those gains.  Going into the NFP report Fed rate hike odds for the May meeting were at 52.6% and now they stand at 70.3%. The Fed won’t stop tightening until they can see consistent weakness in the labor market or inflation significantly closer to target. 

Financial stability risks remain on the table but they are not the primary driver right now and that should be enough to allow this Fed to keep raising rates at the May 3^rd meeting. 

NFP

US employers added 236,000 jobs last month, in-line with the 230,000 consensus estimate and softer than the upwardly revised 326,000 prior reading.  Private payrolls increased by 189,000, lower than the 218,000 estimate, while government hiring rose by 47,000.  The participation rate ticked higher to 62.6%, which also saw the unemployment rate dip from 3.6% to 3.5%.

Average hourly earnings are headed lower and that should ease up on those upward pricing pressures on prices. The average hourly earnings (3-month annualized rate) posted the smallest gain since 2021.  The average hourly earnings month-over-month gain of 0.3% was in-line with expectations. 

The US jobs market is about to get ugly and we may have only a couple more solid reports before we start seeing job losses.    

FX

The dollar rallied against all of its major trading partners after Fed rate hike odds improved after an in-line US jobs report.  A lot of FX traders were expecting a softer jobs print and hoping that the Fed was going to leave rates on hold, but now that might not be the case.

Schwab

Charles Schwab announced that in March they took in $53 billion in net new client assets.  They noted that “deposit flows at Schwab Bank have remained fairly consistent during this tumultuous period.  In fact, adjusting for modestly increased cash movements during the week last month following national concerns about regional bank stability, the average daily outflows were below February.” Schwab’s share prices have been under pressure and they are trying to alleviate concerns that they are under stress.  

Bitcoin

Bitcoin was mostly unfazed with today’s nonfarm payroll report.  It looks like crypto traders are headed for a long weekend as the consolidation phase remains intact as Bitcoin remains trapped in its range.

Bitcoin needed a soft jobs number to trigger a market reaction and that is not what happened today.  Regardless, Bitcoin still has the potential for a big move in the next couple of weeks.  Options volumes are at record levels, interest is growing and if we get some positive developments, that could trigger institutional interest. 

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.