Market Data 
(Reuters) – U.S. employers hired far more workers than expected March while raising wages, suggesting the economy ended the first quarter on solid ground and potentially delaying anticipated interest rate cuts from the Federal Reserve this year.
Nonfarm payrolls increased by 303,000 jobs last month, the Labor Department’s Bureau of Labor Statistics said in its closely watched employment report on Friday. Data for February was revised slightly lower to show 270,000 jobs added instead of 275,000 as previously reported.
Economists polled by Reuters had forecast 200,000 jobs, with estimates ranging from 150,000 to 250,000.
MARKET REACTION:
STOCKS: pointed to a higher open on Wall StreetBONDS: The U.S. Treasury 10-year yield rose 8.9 basis points to 4.398%; Two-year yields rose 7.2 basis points to 4.7127%FOREX: The rose 0.4% to 104.65
COMMENTS:
TIM GHRISKEY, SENIOR PORTFOLIO STRATEGIST, INGALLS & SNYDER, NEW YORK
“It’s very strong payrolls data… well above the prior month and well above expectations. So it really just shows this is a very strong economy. A strong economy provides less need for the Fed to lower interest rates, and we’ve seen that impact in the stock market over the past several weeks. Fed speak has been more ‘hawkish,’ meaning they are not in any hurry to lower rates. It’s smart. They are keeping their ammunition for when it’s needed.”
ART HOGAN, CHIEF MARKET STRATEGIST, B RILEY WEALTH, NEW YORK
“While we continue to consider the non farm payroll number as the most important piece of data every month, it really takes a backseat to inflation. We continue to be surprised by the number of jobs this economy can produce on a monthly basis entering the year.”
“The good news in the report is that the unemployment remains below 4% and then the year-over-year increase in wages remains in or about 4.1%. So wages are up not as much as they were at the end of last year so that’s good news. There’s no inflationary pressure in this jobs report, so I think that’s the key takeaway.”
CHRIS LARKIN, MANAGING DIRECTOR TRADING AND INVESTING, E*TRADE FROM MORGAN STANLEY, NEW JERSEY
“Today’s big upside surprise in the jobs report may not have closed the door on a June rate cut, but there’s a little less daylight coming through than there was a day ago. This will make next week’s CPI and PPI even more important.”
“For months, the stock market has brushed off almost every troublesome bit of data that has come its way, but if those inflation numbers come in hotter than expected for a third month in a row, it could dent the market’s confidence about the Fed’s commitment to cutting rates some time in Q3.”
ANTHONY SAGLIMBENE, CHIEF MARKET STRATEGIST, AMERIPRISE FINANCIAL, TROY, MICHIGAN
“This week’s data, including the employment report, complicates the Fed’s trajectory of maybe cutting interest rates here in the second half. Expectations for June have come down now after the hotter-than-expected employment number that is on top of a hotter-than-expected manufacturing data, a still an expanding services economy. So the economy is doing really, really well.”
“What investors are going to have to grapple with now is that the likelihood that the Fed is going to cut at that May or June meetings are probably off the table. We’ll get the we’ll get the inflation data next week and that’ll be really important.”
“What you’re going to see in the rate markets, which you’ve already seen and what you’re starting to see in the stock market, is investors are recalibrating to this idea that we might not get three rate cuts this year. It might be two, and you know, I think it’s too early to tell her.”
“If the economy is running the way it’s running now through most of this year, then it might be likely that the Fed does not cut interest rates this year. So that will be a change in expectations for investors.”
GENNADIY GOLDBERG, HEAD OF US RATES STRATEGY, TD SECURITIES, NEW YORK
“The numbers certainly beat expectations on headline, revisions, unemployment rate, average hourly earnings – there’s very few obvious blemishes to this figure so I think it is going to be hard for markets to ignore this particular print. The market is pushing Fed rate cut expectations a little bit further out on this reading, and of course you’re seeing Treasuries bear flatten on this report, so not surprising there.”
“The source of uncertainty is going to be geopolitics heading into the weekend, and the CPI print coming up next week. So, I do wonder how willing investors are going to be to stay short the rates market heading into a weekend of geopolitical uncertainty and with CPI coming up next week, especially with some of the FOMC speakers recently telling us to focus on CPI rather than economic data more broadly. It could be a bit of a choppy market from here.”
“I still think if inflation comes down June is still very much on the table for a first rate cut, but of course this very large number could make the Fed think twice about imminently cutting rates, especially if the economy is seemingly quite strong and they’re still adding jobs at a reasonable rate.”
ALEX COFFEY, SENIOR TRADING STRATEGIST, TD AMERITRADE, CHICAGO
“Huge move in yields, no doubt that’s the story for sure out of the gate and it makes sense especially after kind of the flight to quality yesterday that maybe was kind of a counter to the recent move that we’ve seen, which has been this reaction to hotter than expected data – inflationary economic et cetera.”
“But through the lens of how that ISM services set it up on Wednesday, it was a setup where good was bad and it seems like that’s the reaction that we initially got. But when you look at the inflationary piece of this, average hourly earnings year-over-year was in line with expectation, down from prior. Month over month though did heat up a little bit but it was in line with what the expectations were.”
“So a little bit hotter, especially given the fact that we did see average hours uptick slightly again too. Participation rate went up as well. But to me, it’s a pretty big beat on the headline figure with the 303 (thousand), so to me, this is just a good piece of data, but how well the market can stomach a good piece of data as they yearn for rate cuts to kick off early in the summer, and this pushes back on that quite a bit. This seems like one of those situations where after yesterday, it’s still going to be a pretty volatile day.”
BEN LAIDLER, GLOBAL MARKETS STRATEGIST, ETORO, LONDON
“This is now our fifth month over 200,000 new jobs. We were all hoping for a cooling labor market to open the door to early rate cuts and instead we may be getting the opposite. Certainly, for the June meeting, this report may well have closed that door.”
“Markets were braced for a hot report and I think they more than got it. I would fully expect this to be used as an opportunity to some sort of pull back here in the short term for stocks. Think the dollar will get bolstered, Bond yields well, which have been firm for a while will go further up.”
“This report has piled even more pressure on the two big numbers next week, which is the U.S. inflation report on Tuesday and I think expectations well be for a bad report there. But that certainly has the potential to write to the rescue a little bit.”
KIM FORREST, CHIEF INVESTMENT OFFICER, BOKEH CAPITAL PARTNERS, PITTSBURGH
“(The number) is somewhere in the range that people expect the Fed will still be able to lower interest rates at some point this spring. As weird as this sounds, March unemployment by be the thing saving today’s market.”
“And we sold off in anticipation of this yesterday, so we’re going to probably come back a little bit.”
BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN
“The labor market is the gift that keeps on giving jobs, but it’s coal for the bond markets. The fears in the markets shouldn’t be about stagflation. The fears are shifting to one of overheating. However, the job gains are in the most economically insensitive areas, like healthcare, so those fears are overblown.”
“Good job gains where wage gains are modest isn’t inflationary. The Fed doesn’t think it has to kill the economy to tame inflation. This does push out the date when cuts will make sense, but it doesn’t mean the Fed needs to reverse course and start hiking again.”
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK
“This is a hot number again and unemployment ticked lower.”
“The real nitty gritty is what happens to hourly wages, which were basically in line with expectations, just slightly over 4%, on a year-to-year basis.”
“That means that while the fear of a further increase in overall inflation may diminish somewhat, nevertheless it’s a strong number.”
“This means June rate cut is now looking less likely, and the dilemma for the Fed continues.”
DAVID WADDELL, CEO AND CHIEF INVESTMENT STRATEGIST, WADDELL & ASSOCIATES, NASHVILLE
“The headlines are going to talk about unemployment rate being 3.8%, which is a beat but the meaningful data point with the report is average hourly earnings, which have now fallen down to 4.1% year over year, which is the lowest level since June of 2021.”
“So the employment report was hot, but it was a cooling inflation report and that’s why the market can digest it .. this doesn’t really change anything.”
PAUL NOLTE, SENIOR WEALTH ADVISOR & MARKET STRATEGIST, MURPHY & SYLVEST WEALTH MANAGEMENT, ELMHURST, ILLINOIS
“Everything in the numbers look good. Participation rate was up, hours worked were up. The reason the unemployment rate came down was because of more people coming into the labor force.”
“With this number and the prior numbers we’ve seen, it still indicate that the labor market is strong.”
“The revisions are the only thing that I’m looking for. We’ll find out a little bit more from some of the Fed governors that talk today.”
“We been in the camp that the Fed doesn’t cut rates at all because the economy is strong so this still fits within our framework of good employment data that should keep the Fed on the sidelines.”
BRAD BECHTEL, GLOBAL HEAD OF FX, JEFFERIES, NEW YORK
“It definitely pushes out rate cut expectations. You can see the market is already pricing after September now. That should continue to underpin dollar strength on a broad basis.”
“I don’t know that it’ll shake up the carry crowd and the carry narrative, so the high yield versus low yield theme that’s been prevalent throughout FX this year. I think that’s going to continue to be a popular trade at least through the summer, but the dollar will likely also remain supported just given this shift in rate cut expectations.”
