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Today's NFP reports came in strong - readings beat analysts expectations by a decent margin, wage growth accelerated to 4.4% YoY while unemployment rate dropped from 3.5% to 3.4%. Non-Farm Employment Change showed that the US economy grew by an additional 253k jobs in the last month. Overall, the report can be seen as hawkish and would be supportive of continuing rate hike cycles in the United States.
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Wages data came especially unexpectedly - increased up to 4.4% YoY and 0.5% MoM, compared to an expectation of maintaining the current level of 4.2% YoY and 0.3% MoM.
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After the publication, the dollar appreciated and major indexes, such as US500 dropped due to increase in expectations of a possible rate hike in June, although the market currently rules that out.
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Good sentiment prevailed in the stock market, with regional banks recovering losses. PacWest even gained 80%, almost reducing losses from the previous two sessions, but is still trading around 80% lower than before the March crash. Stocks of other regional banks such as Western Alliance and slightly bigger ones such as Charles Schwab also rebounded.
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Good sentiment was also due to Apple's positive results, showing a revenue decrease of 2.5% YoY (but smaller than expected) and an EPS of $1.52 compared to an expected $1.43. The company boasted better-than-expected data on iPhone sales, eventually recording a 1.5% YoY increase. The company increased its dividend and share buyback, but presented mixed expectations for the future.
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Bullard indicated that a recession is not the base scenario and regional banks should remain stable. There are still many uncertainties about the US debt limit and Biden announced his talk with Congress next week.
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The EURUSD returns above the 1.1000 level, which was breached after the NFP report was published.
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Today, oil rebounded by almost 4%, but still loses looking at the whole week. Oil.WTI returns above $70 per barrel.
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Gold has significant problems after setting daily historical highs yesterday. Today, prices are around 1.8% lower, with gold trading at $2,015 per ounce.
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Regional banks fueled the Russell 2000. The index gained over 2%, Nasdaq 100 nearly 2%, and the S&P 500 to be up 1.7%. European indices gained over 1% today, and the WIG20 added 1.5% in the last session this week.
US unemployment rate after publication, Source: XTB Research
