Some Quick NFP Thoughts
Was today a case of good news is bad news and that bad news is good news?
Non-farm payrolls for February came in +311k vs. consensus of +225k jobs added. It seems that the US economy is still resilient as ever in face of the Fed's push to tame inflation. Jobs keeping coming - especially in the services and healthcare sectors.
Anecdotally, this feels right. Many companies I work with are still adding roles in growth areas and pushing to get back to sustainable levels of employment. For so long, firms have been understaffed and have felt the pain. They do not want to be caught short in the same position. Maybe this leads a larger eventual snapback once the Fed stamps down inflation. This is a another piece of data that some can point to in order for the Fed to raise 50 bps in their next meeting. I would not be surprised if this is the case. However, maybe some cracks are beginning to show.
Just yesterday, the news Silicon Valley Bank and their liquidity situation, selling the AFS assets and trying to raise new equity definitely raises some eye brows. The front end of the curve saw yields fall as well. This trend continued post jobs report.
Take a look below, the first screen grab is 5 mins pre-report for the Treasury curve and the second is 10 mins after the report dropped.
I would not be surprised to see markets react negatively to the second strong report of the year. Buckle in, 2023 could be a wild ride.