The Job market remains strong, but it’s still about inflation…

Thoughts of the Day

The US job data beat expectations with +300K jobs created (EXP +200k) and a lower Unemployment Rate at 3.8% (EXP 3.9%). The labour market remains resilient and that could be a factor that will delay Fed interest rate cuts. The upcoming CPI data on Wednesday will be crucial for Fed decision-making.

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Week Ahead

Monday:
Tuesday:
Wednesday: The RBNZ is expected to keep interest rates at 5.50% in its monetary policy meeting.

The US Consumer Price Index is expected to show that prices rose +3.4% Year-on-Year in March, up from +3.2% in February.

The Federal Reserve will release its meeting minutes for its March meeting, possibly giving more insight into how close they are to cutting interest rates in the weeks ahead.

Thursday: The ECB is expected to keep interest rates at 4.50% in its monetary policy meeting.

The US Producer Price Index is expected to show that prices rose +2.3% Year-on-Year in March, up from +1.6% in February.

Friday: The preliminary data for the US University of Michigan Consumer data will be released. The Inflation expectations components will be the focus.

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What Happened Yesterday

Market Movements as of New York Close 5 Apr 24 (7 Apr for Crypto)

Fedspeak:
Logan(2026 voter, slight hawk):
“I believe it’s much too soon to think about cutting interest rates.” “FOMC should remain prepared to respond appropriately if inflation stops falling.”
(Logan is tilting towards a more hawkish stance from mentioning that there is no urgency to cut rates to saying it’s too soon to cut.)

The US Nonfarm Payrolls (NFP) showed that +303k jobs were added to the economy in March (vs +200k expected), down from +207k in February (revised from +223k). The US unemployment rate dipped slightly from 3.8%, against an expectation of remaining at 3.9%. The labour force participation rate increased slightly to 62.7% from 62.5%. Average Hourly Earnings rose +4.1% Year-on-Year as expected, down from +4.3% in February. On a monthly basis, Average Hourly Earnings rose +0.3% as expected, up from +0.2% in February (The Feb print was revised higher from +0.1%).

The Canadian economy lost -2.2k jobs in March (vs +25k jobs added expected), down from +40.7k in Feb. The unemployment rate surprisingly rose to 6.1% (vs 5.9% expected) from 5.8%. The USDCAD spiked +0.54% in reaction.

The US Treasury Yield curve inversion remained at 0.34% as the US 2-year bond yield and the 10-year yield both rose +0.08% to 4.73% and 4.39% respectively.

The US stock futures drifted higher through the Asian and London trading sessions with the S&P 500 futures up +0.22% when the New York session opened. However, it experienced a slight dip when the NFP data was released. The S&P 500 futures fell -0.40% to 5195.50 when the data was released but the dip did not last and it recovered +0.30% from the lows to 5211 soon after.

The US stock market opened higher from Thursday. It then traded higher through the New York session despite the stronger than expected NFP data which caused US bond yields to jump higher by 8 basis points on the day.  The S&P 500 rose +1.11% (high: +1.46%, low: +0.19%), the Dow Jones increased +0.80% (high: +1.15%, low: +0.01%) while the Nasdaq popped +1.28% (high: +1.81%, low: +0.19%).

The crypto market rose along with the US stock market, allowing Bitcoin and Ether to climb +1.32% and +3.84% higher over the weekend.
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Headlines & Market Impact

China central bank to set up $70 billion tech re-lending programme

Notable Snippet: China’s central bank will set up a 500 billion yuan ($70 billion) re-lending programme to support the country’s science and technology sectors, according to a statement released on Sunday.

The programme will offer loans via 21 banks to small and midsize technology companies at an interest rate of 1.75%. The one-year loans can be extended twice, for up to a year each time, the statement said.

China’s policy makers look to boost liquidity and increase confidence in the world’s second-biggest economy amid headwinds from a property crisis and frictions with major trading partners.

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Japan real wages fall for 23rd straight month in February

Notable Snippet: Japanese workers’ real wages fell in February for a 23rd consecutive month, data showed on Monday, suggesting higher prices kept up pressure on consumers’ spending appetite.

The wage trend is among the key data the Bank of Japan examines for pay and inflation outlooks, crucial factors for the central bank to consider in deciding whether to unwind its stimulus policy further.

Inflation-adjusted real wages, a barometer of consumer purchasing power, fell 1.3% in February from a year earlier, down for 23 straight months, data from the labour ministry showed. It followed a revised decline of 1.1% in January.

“We will monitor how growth in nominal pay will develop while price gains are weighing down real wages,” a ministry official said.

Japanese firms agreed to raise wages 5.24% this year, the biggest increase in 33 years, a survey by the nation’s largest union group Rengo showed last week.

Regular or base salary in February grew 2.2% from a year earlier, faster than a revised figure in the previous month, the ministry said.

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Ripple CEO predicts crypto market will double in size to $5 trillion by the end of 2024

Notable Snippet: Ripple’s Brad Garlinghouse told CNBC that he expects the entire value of the crypto market to double, citing macro factors including the arrival of the first U.S. spot bitcoin exchange-traded fund (ETFs), as well as the upcoming so-called bitcoin “halving.”

“I’ve been around this industry for a long time, and I’ve seen these trends come and go,” Garlinghouse told CNBC. “I’m very optimistic. I think the macro trends, the big picture things like the ETFs, they’re driving for the first time real institutional money.”

“The overall market cap of the crypto industry … is easily predicted to double by the end of this year … [as it’s] impacted by all of these macro factors,” Garlinghouse said.

The total crypto market capitalization was roughly $2.6 trillion as of April 4. If the market were to double, that would imply a new total crypto market cap of $5.2 trillion.

One of the other factors that Garlinghouse sees pushing the crypto market to new highs is the possibility of positive regulatory momentum in the United States.

This year being an election year, crypto hopefuls are optimistic that the next administration will be more accommodating to the crypto industry with its policy focus.

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Best,
Phan Vee Leung
CIO & Founder, TrackRecord