Monday, May 6, 2024
NFP clarity or confusion? CBDCs vs sanctions, financial privacy, money printing and more
“There is a Chinese curse which says ‘May he live in interesting times.’ Like it or not we live in interesting times. They are times of danger and uncertainty; but they are also more open to the creative energy of men than any other time in history.” – Robert Kennedy ||
Hello all! I hope you had a great weekend and are ready for yet another intense week, hopefully glittering with achievement and the satisfaction of understanding just a little bit more.
Programming note: this newsletter won’t publish on Wednesday, I’ll share why tomorrow. And I have to temporarily pause audio for production reasons. New ideas coming there.
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IN THIS NEWSLETTER:
NFP clarity or confusion?
CBDCs vs sanctions
Financial privacy is leaving the US
Climate money printing
The SEC and mainstream media friends
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WHAT I’M WATCHING:
NFP clarity or confusion?
After a string of disappointingly strong inflation numbers, Friday’s official employment data for April came as a welcome shock to markets desperate for signs that rate cuts just might be possible this year. It’s the first time I remember in quite a while that the numbers were weaker than expected across the board:
The unemployment rate edged up to 3.9% from March’s 3.8% – consensus estimates had been for it to remain flat.
Non-farm payroll growth was 175,000, the smallest gain in six months. This was lower than the consensus forecast of 238,000 and the 315,000 gain in March.
The growth in average hourly earnings slowed more than expected, to 3.9% vs 4.1% in March. This is the lowest annual gain since June 2021.
The net increase in jobs for February and March was revised down slightly.
Markets jumped and yields dropped, with the 10-year treasury yield briefly touching 4.45% for the first time since early April.
(chart via TradingView)
BTC shot back above $65,000, and has held there.
(chart via TradingView)
And swaps are now pricing in two rate cuts by the end of the year, up from one just a few days ago, with the first coming in September. The market is celebrating that the numbers have essentially taken a hike off the table for 2024 – this gels with what Powell said at his post-FOMC press conference last week.
But markets still feel on edge, with little confidence in the outlook. The employment data is significant, but so are price index releases, and the Fed is unlikely to pivot its view based on one month’s read. On Friday, Federal Reserve Governor Michelle Bowman warned that inflation will likely remain elevated for “some time”, and that she is fine with hiking again if necessary.
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