US jobs market remains on a tear

Edward Bell - Senior Director, Market Economics
Published Date: 09 May 2022


  • The US labour market has shown no signs so far of responding to the headwinds hitting the US economy, namely high inflation and rising wages and interest rates. The April non-farm payrolls print of 428k comes somewhat at odds with data that estimates the US economy shrank unexpectedly in Q1. Job growth was solid across sectors while the headline unemployment rate remained unchanged month on month at 3.6%. Wage growth continues to move higher with average hourly earnings up 0.3% m/m and 5.5% y/y. In tandem with still steady overall economic activity indicators—the Q1 GDP notwithstanding given a quirk due to inventories being run down—the labour market is giving the Fed all the signals it needs to carry on with additional large hikes at upcoming FOMC meetings.
  • To the north, Canada’s job market looked to be on hold in April. Just 15.3k jobs were added last month, well below market expectations of around 40k jobs and well below the more than 70k jobs added in March and the more than 330k jobs added in February. Like the US, Canada’s economy is dealing with high inflation and rising rates but the unemployment rate remains strong, falling to 5.2%, its lowest level in data stretching back to 1976.

Today’s Economic Data and Events


Fixed Income

  • US Treasuries ended the week in slightly mixed fashion with the 2yr UST initially rallying on the April jobs numbers, perhaps assuaged by the relative slowing of wage growth, while the 10yr UST kept pushing lower. At the end of trading yields on the 2yr added almost 3bps to 2.7308% while the 10yr yield rose 9bps to break above the 3.1% handle.
  • Moves were roughly similar in European bond markets with moves in long-term yields outpacing the front of the curve. The 2yr Schatz yield added 3bps to 0.313% while the 10yr bund added almost 9bps to 1.129%. In the UK 2yr gilts actually strengthened as the market doubts the BoE’s conviction to fight back against an ominous inflation outlook while the 10yr gilt added 3bps to 1.994%.
  • Emerging market bond fared little better as risk appetite remains fragile. Yields on the Indian 10yr local currency bonds rose 5bps on Friday to 7.448% while the 10yr South African yields were up 10bps to 10.448%.
  • An index of local UAE bonds dipped over the week as a whole with yields up 18bps to 4.184%.


  • The dollar was modestly weaker against a basket of currencies with only the Euro providing any gains. The single currency added less than 0.1% on Friday even as market conviction on the ECB hiking seems to be somewhat at odds with the pace that policymakers in Frankfurt want. Against all other peers the USD was stronger. The Yen sank again on Friday with USDJPY up 0.3% to 130.56 while GBPUSD fell 0.1% to 1.2348.
  • Weakness in commodity currencies was broad based with USDCAD up 0.3% at the end of the week to 1.2875, the loonie being buffeted by poor Canadian jobs numbers. AUDUSD dropped 0.5% at the end of the week to 0.7076 and NZDUSD was down 0.3% to 0.641.


  • The brutality of the equity sell off last week showed no sign of easing on Friday as all major markets closed again in the red. The reality of a Fed moving by 50bps at several meetings, regardless of whether it’s too late or not enough, now looks to have entrenched into valuations while an increasingly uncertain economic outlook will also weigh on equities. The Dow dropped 0.3% while the S&P fell 0.6% and the NASDAQ closed down 1.4% on Friday.
  • In Europe, markets were similarly bad. The Dax fell 1.6% on Friday while the CAC sank 1.7% and the FTSE was off by 1.5%. In Asia the Hang Seng dropped more than 3.8% while the Nikkei held up reasonably well, the only major index to close higher, up by 0.7% on Friday.


  • Oil prices rose steadily during the week with Brent adding 2.8% last week to settle at USD 112.39/b and WTI added 4.9% to USD 109.77/b. The prospect of an EU embargo on Russian oil and slow production increases from the rest of OPEC+ look to be outweighing the negativity around the demand outlook in China for now.
  • The backwardation in futures markets is now looking more assured with front-month spreads in Brent close at USD 1.55/b, compared with around USD 0.5/b in mid-April. With no apparent near-term supply relief oil markets will likely endure high and volatile trading in the weeks and months to come.

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