MNI ASIA OPEN: Implied Rate Cuts Recede Post Employment Data

EXECUTIVE SUMMARY

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

Historically Tight Labour Market Despite Increased Supply

• Payrolls was particularly close to consensus at 236k (cons 230k) with a minimal two-month revision of -17k, with all of that small downside tweak coming on January’s still stellar 472k (initial 504k).
• 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%.

US

US JOBS: The U.S. job market posted another month of solid job gains in March, while wage growth slowed and more people entered the workforce, the Bureau of Labor Statistics said Friday.

• Nonfarm payroll employment increased 236,000, just above expectations for a 230,000 gain, while the unemployment rate edged down a tenth to 3.5%. Average hourly earnings growth over the month increased a tenth 0.3%, meeting expectations, and was 4.2% over the year, the slowest since June 2021. The U-6 rate ticked down a tenth to 6.7%.
• The labor force participation rate edged up a tenth to 62.6%, the highest since February 2020, and the employment population ratio edged up two tenths over the month to 60.4 percent, also the highest since February 2020. The civilian labor force increased by 480k. The report was largely consistent with market expectations for another quarter point rate hike from the Fed in May. For more see MNI Main Policy main wire at 0856ET.

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.

OVERNIGHT DATA

• US MAR NONFARM PAYROLLS +236K; PRIVATE +189K, GOVT +47K
  
• US PRIOR MONTHS PAYROLLS REVISED: FEB +326K; JAN +472K
• US NET PAYROLLS REVISIONS FOR FEB, JAN -17K

US DATA: AHE Unrounded at a small 0.3; revisions broadly offset with down-revised Feb vs. up-revised Jan.

• Total AHE:
• M/M (SA): 0.272% in Mar from 0.212% in Feb
• Y/Y (SA): 4.241% in Mar from 4.616% in Feb
• AHE Non-Supervisory:
• M/M (SA): 0.317% in Mar from 0.424% in Feb
• Y/Y (SA): 5.088% in Mar from 5.3% in Feb

• US FEB CONSUMER CREDIT +$15.3B
• US FEB REVOLVING CREDIT +$5.0B
• US FEB NONREVOLVING CREDIT +$10.3B

• MNI: US BANK DEPOSITS DECLINED BY $65B WEEK ENDING MARCH 29

MARKETS SNAPSHOT

• S&P E-Mini Future up 9.5 points (0.23%) at 4141.5
• US 10-Yr yield is up 8 bps at 3.385%
• US Jun 10-Yr futures are down 25.5/32 at 115-24
• EURUSD down 0.0011 (-0.1%) at 1.0912
• USDJPY up 0.29 (0.22%) at 132.08

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.

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