May 2, 2017
This week we will get evidence of which jobs report was an accurate
depiction of the current employment picture. The January and February jobs
report showed major increases of over 200,000 jobs. The March jobs report
showed a relatively modest increase of just under 100,000 jobs. The average
for the past 12 months has been about 180,000 jobs per month and, therefore,
the quarterly numbers were right on target in this regard.
The question is, will we return to the strong numbers of January and
February, stay with the lower figure for March, or move back to the norm? If
you are confused as to where the true numbers lie, imagine what the Federal
Reserve Board must be thinking when they meet this week. They don’t get the
benefit of April’s numbers because they meet before the employment report is
released. And yet they must decide whether to raise rates again at this
meeting.
Most are predicting that the Fed will hold steady at this week’s meeting.
Until last week, the stock market had cooled significantly since their last
meeting, international tensions are higher and the inflation data released
recently was decidedly tame. Of course, we can’t predict their decision, but
the evidence supports this hunch. As we have pointed out in the past, the
Fed controls short-term rates and if the Fed acts when the markets are not
expecting it, volatility in the bond and stock markets can follow. It will
be an interesting week.
Source: Origination Pro