Nonfarm Payrolls Shrink by 701,000 to End 113 Months of Consecutive Growth

 

Pandemic crushes employment figures. This morning the Labor Department reported nonfarm payrolls shrinking by 701,000 during the month of March, effectively ending 113 consecutive months of growth. Additionally, the unemployment rate rose to 4.4% from 3.5%, the highest level since August 2017. There remains a large population of market pundits that feel we are just beginning to see the impact of COVID-19 in US economic data, with the worst yet to come — Oxford Economics estimates 27.9 million lost jobs and an unemployment rate of 16% by May. As of last night, the global total of confirmed infections passed 1 million with more than 53,000 deaths. US Treasury yields and swap rates continue to hold near all-time lows, with the 10y UST yield just under 0.60% this morning.

 

 

US oil prices experienced their biggest one-day rally on record. On Thursday, oil prices jumped 25% with market hopes that the price war between Saudi Arabia and Russia will come to an end. After speaking with the Crown Price of Saudi Arabia, President Trump had tweeted, “I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry.” Saudi officials confirmed that they would consider a production cut if joined by other countries in the G20. Brent crude rose 21% to $29.94/barrel and US crude oil rose 25% to close at $25.32/barrel during yesterday’s session, but has given back a portion of those gains this morning. This afternoon President Trump is scheduled to meet with the CEOs of major US oil companies to discuss the current state of energy markets and how to weather the storm.

 

 

Day ahead. The Paycheck Protection Program (PPP) officially begins today – best of luck to our bank readers who are likely receiving thousands of applications from small businesses. IHS Markit will release US services index figures, which surveys over 400 US companies in the private sector, for March which is expected to fall to 37.9, 1.2 lower than its initial reading. The ISM nonmanufacturing index, which surveys 375 firms from across the US, for March is estimated to drop 12.3 from a month earlier to 45.0.