3 Apr 2015
Market pushing expectations for Fed’s hike into Q4 – BBH
FXStreet (Barcelona) - “The US March employment report makes for dismal reading”, quotes the Team at Brown Brothers Harriman, as they review the US jobs data release, and comment on the shift in market expectations surrounding Fed’s rate lift-off.
Key Quotes
“Job growth collapsed to 126k, the lowest monthly total since December 2013. Adding insult to injury, there was a 69k downward revision to this year's job growth. The average work week slipped 0.1%, which may not sound like much but suggests a significant drag on output.”
“One of the few bright spots in this otherwise poor report was the 0.3% rise in hourly earnings. Yet, the 2.1% year-over-year pace is still disappointing relative to past cycles. The participation rate eased back to 62.7%.”
“The unemployment rate was flat at 5.5%, but the underemployment rate slipped to 10.9% from 11.0%.”
“The pendulum of market expectations had already pushed the Fed's lift off into Q4. It is possible that it is pushed into 2016.”
“However, we suspect that while Fed officials will take note of today's report, short-term market participants are likely to put more stock in the high frequency data than the central bank.”
“The speculative community remains very long US dollars, and position squaring will likely see the Q1 trend consolidate and correct here at the start of Q2.“
Key Quotes
“Job growth collapsed to 126k, the lowest monthly total since December 2013. Adding insult to injury, there was a 69k downward revision to this year's job growth. The average work week slipped 0.1%, which may not sound like much but suggests a significant drag on output.”
“One of the few bright spots in this otherwise poor report was the 0.3% rise in hourly earnings. Yet, the 2.1% year-over-year pace is still disappointing relative to past cycles. The participation rate eased back to 62.7%.”
“The unemployment rate was flat at 5.5%, but the underemployment rate slipped to 10.9% from 11.0%.”
“The pendulum of market expectations had already pushed the Fed's lift off into Q4. It is possible that it is pushed into 2016.”
“However, we suspect that while Fed officials will take note of today's report, short-term market participants are likely to put more stock in the high frequency data than the central bank.”
“The speculative community remains very long US dollars, and position squaring will likely see the Q1 trend consolidate and correct here at the start of Q2.“