IND: Employment Data, on Balance, Was Stronger Than Expected
Futures were higher in the overnight trade. Some of the strength can be attributed to reports that the Chinese government supported Chinese equities markets before the start of the National People’s Congress policy meetings. Policy makers in China are meeting to approve a five year plan for the economy.
There were follow through gains when the on balance better than expected employment data was released.
February nonfarm payrolls increased 242,000, which compares to the estimate of a gain of 195,000 and private payrolls advanced 230,000, when up 190,000 were expected.
One thing the longs did not like were the average hourly earnings and average workweek numbers, which were weaker than the estimates.
Average hourly earnings fell .12%, or .03 cents and the average workweek declined to 34.4, when 34.6 was anticipated.
The labor force participation rate improved to 62.9%, when 62.8% was estimated.
Stock index futures are likely to be supported in the long run by the globally low interest rate environment.
CURRENCY FUTURES
The U.S. dollar advanced when the mostly better than expected employment data was released.
However, pressure on the U.S. dollar developed when traders took a closer look at the employment data and did not like the weak average hourly earnings and average workweek numbers.
Longer term the U.S. dollar is likely to continue to be supported by bullish interest rate differentials.
There was temporary support for the euro currency in the overnight trade on news that retail sales in February in the euro zone improved with the euro zone purchasing managers index advancing to 50.1 from 48.9 in January.
The Japanese yen is lower as flight to quality longs are liquidated in light of a better tone to the world’s financial markets.
The Australian dollar is higher due to ideas that China will ramp up its stimulus plans, which will result in more demand in China for the raw materials that Australia exports.
INTEREST RATE MARKET FUTURES
Futures were mostly higher in the overnight trade, but quickly fell when the better than expected employment data was released.
However, prices quickly fell when the mostly stronger than expected employment data was released.
Kaplan of the Federal Reserve will speak at 12:00 central time.
Before the employment reports were released there was a 4% percent probability that the Federal Open Market Committee will increase the fed funds rate by 25 basis points at the March 15-16 policy meeting. This compares to 2% yesterday.
Also, before the employment reports, according to the financial futures markets, there was a 60% probability that the FOMC will increase the fed funds rate by 25 basis points at the December 13-14 meeting, when 59% was predicted yesterday.
