Strong Jobs Reports Weighs on Rates
Prior Week Summary
Rates rose over the course of the week, led by a strong jobs report. According to recent data provided by the Labor Department, American businesses added 313,000 jobs in February while the jobless rate remained unchanged at 4.1%. Importantly, the labor force rose by the largest amount in nearly a decade, gaining over 800,000 last month which may indicate that there is still room for the labor markets to tighten further, even with unemployment hovering just above 4%. The gains were mostly positive across the different industries in the survey, with noteworthy increases in the construction, transport and the broad goods producing sectors. The report also detailed a strong increase in the participation rate for men aged 25 to 54, which increased to nearly 90% in February, the highest level of that metric in nearly eight years.
Average hourly earnings rose 0.1% in February, bringing the year-over-year increase back down to 2.6%, which may ease some of the concern from last month’s report about the pace of wage inflation. The average work week was reported to have risen to 34.5 hours, an increase of 0.1 hours from the January report.
In other news, the Federal Reserve Bank of New York published a time series of the volume-weighted mean rate of primary dealers’ overnight Treasury general collateral repo borrowing activity going back to 1998 on their public website. The data may help market participants gain greater understanding of how the new SOFR index may react in different interest rate and monetary policy environments.
The Look Forward
There is a lot of market moving data expected this week, beginning with CPI on Tuesday, and PPI on Wednesday. There will also be a heavy supply of Treasuries to hit the market with $96 billion of T-bills, $28 billion of 3-year notes and $21 billion of 10-year notes.
Sources: Bloomberg Finance L.P., (Treasuries) Chatham Financial (Swap Curves), FHLB Boston, Chicago, Dallas, Des Moines for FHLB Advance Rates. Wells Fargo Brokered CD Indications.
Market Implied Policy Path (Overnight Indexed Swap Rates)
Source: Chatham Financial
Fixed Income Snapshot
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