With the latest U.S. Non-Farm Payrolls (NFP) data report released on Good Friday, the 7th of April 2023, market participants saw the U.S. economy create 236,000 jobs in March, the lowest number since December of 2020, and in line with general market consensus estimates.
While another upside surprise could have sparked expectations for further potential rate hikes amidst an ongoing battle against inflation, market participants will be highly relieved to see a noticeable tick-down in employment data “after unusually mild weather and seasonal factors led to strong job gains in the first two months of the year.” With Federal Reserve Chair Jerome Powell informing the market that officials had indeed considered a potential pause in rate hikes in the most recent FOMC meeting and annual U.S. CPI falling to 6% for February, down from January’s annual figure of 6.4%, market participants will remain hopeful that an end to the rate-hiking cycle is near, especially if March’s inflation data indicates a continued downtrend in general price levels.
Amidst several other factors, the FED’s recent aggressive rate-hiking cycle led to the second-largest bank failure in American history as Silicon Valley Bank succumbed to “a classic bank run,” sparking fears of financial contagion and systemic failure. Following the collapse of Silicon Valley Bank, Jerome Powell admitted that Reserve Bank officials were heavily considering a pause in the FED’s rate-hiking cycle. As indicated by the latest U.S. NFP data report for March 2023, cooler employment data has strengthened the case for rate caution. As market participants digest the latest employment data, all eyes will turn to March’s CPI data report and the FED’s following interest rate announcement to gauge how Jerome Powell aims to bring inflation down to its 2% target rate.
Sources: Bloomberg, Trading Economics, U.S. Bureau of Labor Statistics
Disclaimer: Trive South Africa (Pty) Ltd, Registration number 2005/011130/07, and an Authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 2002 (FSP No. 27231). Any analysis/data/opinion contained herein are for informational purposes only and should not be considered advice or a recommendation to invest in any security. The content herein was created using proprietary strategies based on parameters that may include price, time, economic events, liquidity, risk, and macro and cyclical analysis. Securities involve a degree of risk and are volatile instruments. Market and economic conditions are subject to sudden change, which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. When trading or investing in securities or alternative products, the value of the product can increase or decrease meaning your investment can increase or decrease in value. Past performance is not an indication of future performance. Trive South Africa (Pty) Ltd, and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered from using or relying on the information contained herein. Please consider the risks involved before you trade or invest.
