Non-Farm payrolls showed that 303k jobs were added, well above the 214k estimate; the unemployment rate dipped to 3.8% while wage growth was in-line, average hourly earnings dipping to 4.1% y/y..
Having drifted in Asia US Treasuries were then slammed, bear-flattening initially before selling moved further out along the curve. There were initially buyers of the dip amid lingering geopolitical concerns over the weekend, but sellers took over into the close, with CPI+PPI data for March and $119bn of 3yr/10yr/30yr supply looming this week.
2yr yields went out near the upper end of the weekly rate at 4.735%, as Fed speak remained hawkish. Barkin repeated his view that there is no rush to adjust policy; Logan was hawkish, called it ‘much too soon’ to think about rate cuts amid ‘meaningful risks’ to inflation progress and warned policy may not be as restrictive as believed; Bowman opined taht it is not yet time to lower rates and repeated she would support another rate INCREASE if inflation stalled.
Despite this several big banks (BoA, MS, GS) reiterated their call for a June rate cut, arguing the Fed will look past the stronger prints due to labour supply-side tailwinds, where wages are being contained. JPM however, said the jobs data lessens the Fed’s urgency to ease and pushed back their Fed rate cut call from June to July.
What’s Priced in? June rate cuts odds dipped back towards 50/50 while the total for 2024 dipped back towards the weekly lows of 65bps.