March jobs report better than expected while February numbers were revised

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Published Date 4/1/2022

The March unemployment rate dropped to 3.6% from 3.8% in Feb (expectations 3.7%); non-farm jobs 431K, (expectations 490K, Feb revised to 750K from 678K), private jobs 426K (expectations 458K, Feb revised to 739K from 654K). Average hourly earnings +0.4% as expected from 0.0% in Feb; annual +5.6% against 5.5% expected and up from 5.2% in Feb, revised from 5.1%. Labor participation 62.4% as expected. Big revisions to Feb data. The reaction sent the 10 yr. yield to 2.43% from 2.33% yesterday. The 2/10 spread has inverted, making the entire curve inverted.

The weaker jobs in March, offset by sizeable upward revisions in Feb. The increase in average hourly earnings will provide the Fed with reasons to increase the FF rate by 50 bps in four weeks at the next FOMC meeting. Even prior to this report Powell made it clear a week ago the Fed must move more rapidly in tightening to slow inflation that is continuing t increase and negating increases in wages as prices increase. President Biden opening the strategic oil reserve adding 180 mil barrels of oil over the next six months lauded as a relief of higher gas prices.

Treasury futures began slipping after yesterday's close, accelerating their retreat as the night went on. The overnight selling caused a brief inversion of the 2/10 spread. In overnight trading the release of a big batch of data from Europe and Asia. China's Caixin Manufacturing PMI returned into a contraction for the first time since January while the Eurozone's yr./yr. CPI rate accelerated to a fresh record of 7.5% in the flash reading for March, from 5.9% in Feb.

At 9:30 am ET the DJIA opened +88 after declining 550 yesterday, NASDAQ +49 from -222 and S&P +15 from -72 yesterday. FNMA 4.0 30 yr. coupon -36 bps and -53 bps from 9:30 am yesterday. The 4.5 coupon at 9:30 am -56 bp and -27 bps from 9:30 am yesterday.

At 10 am March ISM manufacturing index, expected at 59.0 declined to 57.1 from 58.6 in Feb.

More jobs, higher wages and a drop in the unemployment rate return the rate markets to inflation concerns after some improvement the last four sessions. Inflation fears never ebbed, just paused until more data was released.

Source: TBWS

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