MNI ASIA MARKETS ANALYSIS: Historically Tight Labour Market

HIGHLIGHTS

Key links: MNI BRIEF: US March Jobs Meet Expectations; Wage Growth Slows

US TSYS

US TSYS: MSNBC interview of former Fed Vice Chair Lael Brainard, currently director of the National Economic Council since February 21, 2023, comments on this morning's March employment data: "really nice report" with "lots of positives in jobs market".

• No market reaction, futures have quietly drifted back near initial post-data lows: USM3 at 133-04 (-31) vs. 132-31 low, 30Y yield at 3.5956% +.0450, TYM3 115-25.5 last (-24) vs. 115-23 low, 10Y yield 3.3775% +.0725.
• Yield curves near lows: 2s10s -7.092 at -60.304 vs. -60.568 low. Very light overall volumes ahead the early session close at 1100ET (Globex 15 minutes later), TYM3 under 320k at the moment.

• A 3-mth average of 345k and 6-mth average of 315k remains far stronger than long-term levels consistent with population growth, whilst in the household survey, employment roared back with 577k as it maintained recent volatility.
• That pushed the u/e rate down to 3.50% (cons 3.6) although as noted it didn’t take that much from 3.57% prior. This u/e rate is only marginally off January’s 3.43% in what was the lowest level since 1969.
• Impressively, this came despite the participation rate rising further to 62.6 (labour force increased another rapid 480k) for a new post-pandemic high (although still 0.5pts off pre-pandemic levels). Interestingly, it was led by non-prime cohorts returning whilst the prime-age participation rate consolidated last month’s increase pre-pandemic recent highs of 83.1%.

SHORT TERM RATES

US DOLLAR LIBOR: No settlements Friday and Monday due to London bank holiday, resume Tuesday. For reference, the levels below are from Thursday, April 6:

• O/N +0.00042 to 4.80971% (+0.00885/wk)
• 1M +0.01015 to 4.90029% (+0.04258/wk)
• 3M -0.01314 to 5.19786% (+0.00515/wk)*/**
• 6M -0.05471 to 5.23743% (-0.07557/wk)
• 12M -0.07386 to 5.12571% (-0.17958/wk)
• * Record Low 0.11413% on 9/12/21; ** New 16Y high: 5.22257% on 4/3/23

• Daily Effective Fed Funds Rate: 4.83% volume: $98B
• Daily Overnight Bank Funding Rate: 4.83% volume: $122B

EURODOLLAR/SOFR/TREASURY OPTIONS SUMMARY

• SOFR Options:
  • Block -10,000 SFRM3 95.25/95.50 call spds, 2.5 to 3.25 vs.
  • +10,000 SFRM3 94.93/95.00 put spds, 2.5 to 3.0
  • 1,000 SFRK3 95.12/95.18/95.25/95.31 call condors ref 95.165
  • 1,500 SFRJ3 95.18/95.25/95.31/95.43 call condors ref 95.17
• Treasury Options:
  • 2,000 TYK3 117/118.75/119.5 broken call trees on 2x1x1 ratio, 34 net ref 115-27
  • 2,300 FVM3 107/108/109 put trees, 11 ref 110-05
  • Block, 7,500 TYK3 114.5 calls vs. TYM 114 put calendar combo, 1-34 net vs. 116-13/0.80%
  • +5,000 TYM3 112 puts, 13 ref 116-10.5
  • 1,000 TYK3 118/120 call spds ref 116-16
  • 2,100 FVK3 108.75 puts, 4.5 ref 110-19.5
  • 1,250 FVK 112.5 calls, 11 ref 110-16.75

FOREX: EURUSD Sees Decent Retracement Of Payrolls Drop, USDJPY Holding Firmer

• EURUSD trading back at circa 1.09 having touched a low of 1.0877 and now 15 pips lower than before the payrolls release.
• It pushed higher having tested support at 1.0883 (Apr 4 low) for pre-JOLTS levels, and for now at least doesn’t appear to have steam to push lower to next open 1.0802 (20-day EMA).
• USDJPY meanwhile holds most of its climb, trading at 132.24 off a high of 132.38, still near resistance at the 20-day EMA of 132.55, a clear break of which could open some leeway to 133.77 (50% of Mar 8-24 bear leg) in what would be a departure from the recent trend needle pointing south.
• Elsewhere, only NZD maintains gains vs the greenback on the day at typing, although only just at +0.02% from +0.24% prior with NZDUSD trading 0.6247.

S&P Eminis Top of Range

Front month emini futures (ESM3) finished the abbreviated session near post data high of 4142.5 at 4141.50.

Monday Data Calendar

Date	GMT/Local	Impact	Flag	Country	Event
10/04/2023	-			EU	ECB Lagarde at IMF/World Bank Spring Meetings
10/04/2023	1400/1000	**		US	Wholesale Trade
10/04/2023	2015/1615			US	New York Fed's John Williams
11/04/2023	2301/0001	*		UK	BRC-KPMG Shop Sales Monitor
11/04/2023	0600/0800	*		NO	CPI Norway
11/04/2023	0900/1100	**		EU	Retail Sales
11/04/2023	1000/0600	**		US	NFIB Small Business Optimism Index
11/04/2023	-			EU	ECB Lagarde and Panetta in IMF/World Bank Spring Meetings
11/04/2023	1255/0855	**		US	Redbook Retail Sales Index
11/04/2023	1600/1200	***		US	USDA Crop Estimates - WASDE
11/04/2023	1730/1330			US	Chicago Fed's Austan Goolsbee
11/04/2023	2200/1800			US	Philadelphia Fed's Patrick Harker