This is Mr. Chandler's weekend post, for his Monday edition see after the jump.
From Marc to Market, April 6:
The March US employment data were stronger than expected and lend support to the re-acceleration hypothesis and an extension of US exceptionalism. In Q1 24, nonfarm payrolls rose by an average of 276k. It was the strongest quarter in a year and compares with an average monthly job gain of about 251k in 2023. The unemployment rate slipped as the household survey jumped around 500k after falling in the previous two months. The workweek increased, and the participation rate rose. Reasons to dismiss the employment data are becoming thinner. The economy is still growing faster than what the Fed regards as the long-term non-inflation pace (1.8%). The US two-year yield rose 12 bp and approached the high for the year (4.75%), and the 10-year yield set a new high (4.43%) and settled up 19 bp. Still, the US dollar closed softer against most of the G10 currencies last week but the Swiss franc, Japanese yen, and the Canadian dollar. Several commodities, including gold, oil, and copper, rose sharply, which seems incongruent with higher rates and a stronger dollar.
The week ahead features the US inflation gauges, the European Central Bank, and the Bank of Canada meetings. The US CPI is expected to remain firm. The ECB and Bank of Canada are seen standing pat but preparing the ground for rate cuts. Chinese markets reopen Monday after being closed for the last two sessions. With the dollar near the upper end of the approved band, the PBOC's fix on Monday may give more insight into official efforts. CPI is expected to remain positive but less so than the 0.7% year-over-year pace in February, while deflationary forces continue to grip producer prices. Japanese Prime Minister Kishida and Philippine President Marcos meet with President Biden, and security issues can be expected to dominate discussions. It would seem awkward for Japan to intervene in the foreign exchange market around the summit.
United States: Federal Reserve officials need greater confidence that inflation is on a sustainable path toward its 2% average target. It is unlikely to find such evidence with this week's report of the March CPI, which comes on the heels of the stronger-than-expected jobs data at the end of last week....
....MUCH MORE
Also at Marc to Market, April 8:
Will the Market Push the Dollar Above JPY152 as Japanese Prime Minister Heads to the US?
