From the Desk

Recent Economic Commentary

Brandon Casey, Member Strategist - 5/3/2024

U.S. stocks jumped in early trading on Friday as a lackluster jobs report raised expectations for rate cuts. All three major averages are up at least 1% and are now all trending to finish the week higher. Traders now expect the first rate cut to take place in September and believe another cut will happen in December.

Looking at economic data today, nonfarm payrolls rose by 175,000 in April, well below expectations of 240,000 and the lowest total since October 2022. The unemployment rate ticked higher to 3.9%, above expectations of remaining unchanged at 3.8% and the highest level since January 2022. Average hourly earnings were up 0.2% for the month and 3.9% over the last year, both below expectations and encouraging signs for inflationary pressure.

Elsewhere, the ISM Services Index unexpectedly fell to a reading of 49.9 in April, below expectations of 52.0 and the first time the sector contracted since December 2022. Business activity fell 6.5 points to a reading of 50.9. New orders expanded for a sixteenth straight month and employment contracted.

U.S. Treasury yields are lower this morning, with the 2-year Treasury yield down 5.5 basis points to 4.82%, the 5-year Treasury yield down 5.0 basis points to 4.52%, and the 10-year Treasury yield down 3.1 basis points to 4.54%. Advance rates are lower throughout the curve today.