The ADP Private Jobs report was much stronger than expected

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Published Date 4/3/2024

US financial markets continue to reel over the concerns the Fed may withhold the June rate cut that had been discounted in both stocks and bonds. Prior to 8 am ET this morning the 10 year traded down 2 bps to 4.4%, by 8:30 am the rate increased to 4.40%, yesterday’s high. ADP private jobs stronger than forecasts, +184K against estimates of 150K and February jobs revised from 140K to 155K. The increase in jobs was the highest hiring since last July, further adding to the debate on when the Fed will cut. Most all the job growth came from the service sector (142K). ADP data and BLS data don’t usually match up, the BLS data includes government workers, the current estimates for Friday’s March employment has jobs increasing by 200K after increasing 275K in February.

After Monday’s ISM manufacturing index swung from contraction to expansion, the thought of a June rate cut was softened sending rates higher and the DJIA lost over 600 points in two sessions. At 12 pm Jerome Powell will speak about the economic outlook; traders will parse each word for clues of when they believe the Fed will move.

More Fed comments, this one from Atlanta Fed president Bostic, saying that the Fed should wait to the fourth quarter before cutting rates. In an interview on CNBC, Bostic said that he expects inflation to slow incrementally this year. He sees the economy maintaining strong momentum. Any weakness has been very incremental, he said. Bostic is a voting member of the Fed's interest-rate committee this year.

At 9:30 am the DJIA opened -42, NASDAQ -65, S&P -8. 10 year note 4.42% +6 bps. FNMA 6.0 30 year coupon at 9:30 am -22 bps from yesterday’s close and -3 bps from 9:30 am yesterday.

At 9:45 am March PMI composite index expected at 52.2 reported at 52.1; the service sector index at 51.7 as forecast.

At 10 am March ISM services sector index, expected at 52.7 from 52.6, declined to 51.4. Still above 50 but the index at a three-month low; countering the strong ISM manufacturing index released on Monday. MBA prices improved from 9:30 am (-7 bp from -22 bps).

Source: TBWS

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