2024-05-03 22:49:43
New employment in the U.S. in April was lower than expected, and the unemployment rate was the highest since January 2022. The US job market, which was hot despite high interest rates, showed signs of cooling in April. The New York stock market continued to rally due to figures raising expectations of an interest rate cut in September, and U.S. Treasury yields fell all at once.
On the 3rd (local time), the U.S. Department of Labor announced that new employment in the U.S. non-farm sector in April was 175,000 compared to the previous month. This number is significantly lower than the market forecast (240,000 people) and is a significant decrease from 303,000 people in March. The unemployment rate was also 3.9%, exceeding the forecast (3.8%).
The hourly wage increase rate, which directly affects inflation, was 0.2% compared to the previous month, below the market forecast (0.3%). Compared to the same period last year, it was 3.9%, the lowest figure since June 2021.
Chairman Jerome Powell previously mentioned at a Federal Open Market Committee (FOMC) press conference that for the Federal Reserve to cut interest rates, the labor market must show weakness or the rate of inflation slowdown must accelerate. Although he ruled out raising interest rates, he expressed concern about the recent inflation trend, saying “there is insufficient progress” to reach the Fed’s target of 2% inflation, and was reluctant to mention a cut point.
However, as this day’s report signaled a slowdown in the labor market, expectations for an interest rate cut in September are rising again. According to the Chicago Mercantile Exchange’s FedWatch, which predicts the direction of the Federal Reserve’s interest rates through investment in policy interest rate futures, immediately after the announcement, investors raised their forecast for an interest rate cut in September from 60% to 70%. There is a high possibility of two interest rate cuts by the end of the year.
As expectations for an interest rate cut in September remain alive, as of 2 p.m. Eastern time on the 3rd, the Dow Jones Industrial Average index is up 1.2%, the Standard & Poor’s (S&P) 500 index is up 1.3%, and the Nasdaq index is up 2%. there is. The U.S. 10-year Treasury bond interest rate has also fallen to the 4.5% range, and the 2-year Treasury bond rate is also at 4.81%. Previously, the interest rate on two-year government bonds exceeded 5% due to caution over inflation.
Some are pointing out that expectations of a September cut are premature. The Wall Street Journal (WSJ) said, “The May employment report is scheduled to be released before the next FOMC meeting on June 11th and 12th, so the employment indicator on the 3rd alone will not have an immediate impact on the Federal Reserve.”
New York = Correspondent Kim Hyun-soo [email protected]
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2024-05-03 22:49:43