Treasury yields are higher after another upside surprise from the April jobs report. Nonfarm payrolls added 253,000 jobs last month, well above consensus expectations of a 185,000 increase, and the headline unemployment rate ticked back down to a new cycle low of 3.394%. Wage growth also exceeded expectations, with average hourly earnings up 0.5% m/m and 4.4% y/y. On the negative side, payrolls growth for the prior two months was revised down by 149,000 jobs, and the decline in the April unemployment rate was partially attributable to a 43,000 decline in the official labor force. Regardless, there are no signs of a deteriorating labor market in this report for Fed hawks.
Regional bank stocks are rebounding in pre-market trading, with PacWest shares up 21% and Western Alliance up 18%. The Fed’s updated H.4.1 report released yesterday showed a $74 billion decline in borrowing activity for the weekend ended May 3. Most of the decline came from reduced utilization of the discount window and was attributable to First Republic’s failure last weekend.
Jason Haley
Chief Investment Officer
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