Macro Monkey Says
Much Ado About Nothing
Does anyone even care about this? Scroll down to find the SVB coverage for today (with plenty more to come). But hey, if you’re still here, let’s talk jobs for a hot minute.
At the beginning of last week, everyone was unbelievably hyped for Friday’s jobs report. This hype only grew when JPow basically slapped Mr. Market in the face and said, “the next rate hike will depend almost exclusively on this jobs report” during his testimony.
And then the 16th-largest bank in the United States collapsed, decimating the financial sector, startup ecosystem, and markets as a whole for the day (at least).
Definitely isn’t wild to assume that this collapse might change JPow’s game plan, but we gotta take a look at what he told us would be the most important part of the week.
In February, the United States economy added 311,000 jobs. Big swing and a miss for economists who expected the nation to add 205,000 for the period, off by about 50% this time around. So, despite the staunch slowdown from January’s revised net job gains of 504k, this last month was still a sharp surprise.
Meanwhile, the unemployment rate actually grew from 3.4% to 3.6%. That’s exactly what JPow wants to see, although the uptick remains at a near half-century low.
All in all, Friday’s report was close to exactly what we wanted to see. Job growth is strong, maybe even still too strong, yet the rising unemployment rate shows that the labor force is growing, meaning that the supply of labor is on the rise.
Now that’s what we want to see. For Powell and the FOMC, they ideally would’ve hoped for lower growth numbers, but the drastic fall from January’s explosive reading should be good enough for the boy.
Considering SVB has—to use the technical term—f*cked all our sh*t up, the market’s reaction is a lot tougher to read. Still, the implied probabilities for the next rate move have shifted back to a majority expectation for a 25 bps hike after swinging 70% odds to a 50 bps jump earlier this week.
Now is where I’d talk about how the market might react to the report and upcoming FOMC meeting, but actually, zero human beings on Earth care now that SVB has shot itself in the face. The point is there was no data in the report to support a shift back to 50 bps hikes, not that anyone cares.
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