Daily Market Color

Robust Jobs Data Drives Risk Assets Higher

 

Nearly Flawless Employment Data

The Labor Department’s employment report for February displayed nonfarm payrolls increasing at their largest monthly clip since July 2016.  The robust 313,000 seasonally-adjusted pace far exceeded expectations of +205,000 and was a solid uptick from January’s upwardly revised figure (+239,000).  Payroll additions were broad-based, including 61,000 construction hires, 50,000 new retail jobs and 31,000 additional factory jobs.  The unemployment rate held at a 17-year low of 4.1% — its fifth consecutive month at that level, while the underemployment similarly went unchanged at 8.2%.  The jobless rate was especially encouraging given that the labor force participation rate climbed to its highest mark since September to 63%.  Average hourly earnings represented the lone weak spot in the report, as wages climbed 0.1% MoM (+0.2% expected), and 2.6% YoY (+2.8% expected), with a 0.1% downward revision to the prior month recorded as well.       

 

 

All markets seemed to be buoyed by the positive aspects of the employment report this morning.  US Treasurys sold off throughout the trading session, with yields/rates climbing 1-4bps across the curve in a bear-steepening pattern.  The 10-year note yield is poised to finish the week near 2.90%, 2bps higher than where it opened Monday. There was no shortage of volatility in the market this week, moving on the news of tariffs on steel and aluminum, Gary Cohn’s departure and the prospect of diplomatic talks between the US and North Korea.  Major stock indices were all higher on the day, with the DJIA gaining 1.77% and the S&P 500 climbing 1.74% .  The Nasdaq  was up 1.79%, closing at 7560.8, which represents a new a record close for the tech heavy index.  In commodities, crude oil futures finished the week on a high note as WTI crude gained 3.2% to $62.05/barrel.  The US dollar fell, losing 0.1% against major currencies.

 

 

The Donald to Meet with Rocket Man

Asian markets rallied overnight in response to the news that President Trump has agreed to a face-to-face meeting with North Korean dictator Kim Jong Un.  It is being reported that the meeting would occur before May and is seen as a significant step towards the possible denuclearization of the Korean Peninsula.  Utilizing his typical means of communication, Trump tweeted “Kim Jong Un talked about denuclearization with the South Korean Representatives, not just a freeze. Also, no missile testing by North Korea during this period of time. Great progress being made but sanctions will remain until an agreement is reached. Meeting being planned!”  No meeting between a sitting US President and head of North Korea has taken in modern history, but foreign policy pundits remain skeptical of the true intentions of the presently isolated nation’s leader.     

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