On April 7th, the US Bureau of Labor Statistics released its report on unemployment for the month of March. The report showed that the unemployment rate in the US had dropped to 3.5%, which was 0.1% lower than what had been predicted. This news was met with mixed reactions from investors, with the stock market and crypto markets taking a hit while the US dollar remained stable.
The report also revealed that the US economy had added 236,000 jobs in March, which was higher than the estimated 228,000 jobs. While this was good news, it still indicated a slower job growth rate compared to December 2020, especially as the Federal Reserve tries to curb labor demand to reduce inflation.
On Friday, as the Easter holiday closed many markets and U.S. markets traded on a half day, the Treasury yields slightly increased in anticipation of the U.S. non-farm payrolls report. Investors are closely monitoring the labor market data to evaluate potential Fed reactions and the risk of a recession. The 10-year Treasury note yield rose by 1.5 basis points to 3.305%, while the 2-year rate increased by 1.8 basis points to 3.839%.
Furthermore, the report showed that average hourly earnings for workers increased by 0.3% in March, which was in line with previous estimates. This could put pressure on commodity prices, as workers’ wages are still relatively low compared to inflation rates.
The FedWatch tool by the CME Group shows that 43.9% of investors predict that the Federal Reserve will stop raising interest rates at their upcoming meeting in May, while 56.1% predict a 0.25% rate increase.
Interestingly, the report’s release did not have a significant impact on Bitcoin and the crypto market as it had in the past. Bitcoin has been experiencing positive fluctuations in recent weeks, possibly due to increased commodity demand. However, investors are wary of the risks associated with central bank emergency funding programs, as it could lead to higher inflation.
On the other hand, risky assets such as commodities have become more attractive to investors after reports that the US Treasury Department is considering expanding the Federal Deposit Insurance Corporation’s coverage to bank deposits on March 21st.
Overall, the report indicates a slow but steady recovery for the US economy in terms of job growth, but it also highlights the challenges posed by inflation and the need for the Federal Reserve to make strategic decisions to ensure economic stability. Investors remain cautious, but the market seems to be adjusting to the current economic climate.
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