Previous Trading Days Events 05.07.2024

The U.S. job growth slowed more than expected in April and the increase in annual wages fell below 4.0 for the first time in nearly three years, but the labour market remains fairly tight.

Nonfarm payrolls increased by 175K jobs last month. Revisions showed 22K fewer jobs created in February and March than previously reported. Average hourly earnings rose 0.2 after climbing 0.3 in March. Wages increased 3.9 in the 12 months through April.

The unemployment rate rose to 3.9 from 3.8 in March amid increasing labour supply. Nonetheless, the jobless rate remained below 4 for the 27th straight month. Data this week showed job openings declining in March. Signs of labour market cooling raised optimism that the U.S. central bank could after all engineer a softlanding for the economy.

Financial markets boosted the odds of a September rate cut and saw the Fed reducing borrowing costs twice this year instead of only once before the data.

The Fed on Wednesday left its benchmark overnight interest rate unchanged in the current 5.255.50 range, where it has been since July. Since March 2022 the Fed has raised its policy rate by 525 basis points.

Were sticking with our call for a first ease in July, said Michael Feroli, chief U.S. economist at JPMorgan. The market is not there, but we believe that if the next two job reports show continued cooling in labour market activity, then the Fed will be comfortable taking back some of its policy…