Reuters Interview 4/1/22

NEW YORK, April 1 (Reuters) – U.S. job growth continued at a brisk clip in March, with the unemployment rate falling to a new two-year low of 3.6% and wages re-accelerating, positioning the Federal Reserve to raise interest rates by a hefty 50 basis points in May.

The Labor Department’s closely watched employment report’s survey of establishments showed that nonfarm payrolls increased by 431,000 jobs last month.

Data for February was revised higher to show 750,000 jobs added instead of the previously reported 678,000. Economists polled by Reuters had forecast payrolls increasing 490,000. The unemployment rate dropped to 3.6%, the lowest since February 2020, from 3.8% in February. read more

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MARKET REACTION:

STOCKS: S&P e-mini futures slightly pared gains and were last up 0.3%, pointing to a steady open on Wall Street

COMMENTS:

SHAWN CRUZ, DIRECTOR OF DERIVATIVES STRATEGY, TD AMERITRADE, CHICAGO

“It was the wage increase, it wasn’t awful but if there was one thing I noticed yesterday was when we got the income and expenditures was that there was a little bit of a slowdown in spending and some people could view that as just not keeping up with inflation. And it doesn’t look like the wage growth here was quite enough to keep up with some of the inflation we are seeing either, so there is a little bit of concern around what does that mean for consumer spending, that is one area that might create some concern.”

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“Generally speaking, there was a little bit of an expectation that maybe a lot of this inflation was going to start pulling people back into the labor market, getting more people back to work, and undershooting that a little bit is another area where there is going to be a little bit of concern as well. But there is still enough of a wage increase component in this – average hourly earnings were up 5.6% – which is still a decent jump where that keeps the Fed in the spot where that is still inflationary and that is still going to keep the expectation that everyone had before that they are going to have to tighten in place.”

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“Right now the catalyst is wages not keeping pace with inflation but inflation also forcing the Fed to continue to have to tighten policy aggressively.”

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

“It’s decent report, but it carries wage pressures and a half-percent (interest rate) rise at (the Fed’s) May meeting is a near certain. And if inflation accelerates even further then at the June meeting, we’re looking at another half-percent rise.”

“Basically, the report is good, but it just means the Fed is going to get more hawkish.”

“In terms of the market, it’s coming off a little bit. Yields are moving higher the dollar is moving higher. It’s the beginning of a new quarter, we’ll probably have a mixed to positive trading session based on the news.”

Compliled by the global Finance & Markets Breaking News team

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