Prior Week Summary
The Treasury market closed on Friday at the highs for the week in yield terms, culminating with a strong headline print on the February payrolls report. The Labor Department reported that the economy added 242,000 jobs in February, following a gain of 172,000 in the month of January. The improvement was greater than the 195,000 gain that was expected by economists surveyed by Bloomberg prior to the release and could help underscore statements made by Fed officials about the strength of the labor markets helping to pull up inflation expectations in the intermediate term.
However, the report was somewhat more mixed than the strong headline figure would seem to indicate as the report also detailed a drop in average hourly earnings on a monthly basis, which fell 0.1% in February. The monthly decrease represents the first decline on a month-over-month basis of the series since December 2014. On a year-over-year basis, the change in average hourly earnings fell to 2.2% at the same time average hours worked fell by 0.2 hours to 34.4. The household survey showed a fairly robust increase of 530,000 positions, while the unemployment rate held steady at 4.9% and the underemployment rate fell slightly to 9.7% from 9.9%. Interestingly, the labor force participation rate increased in a counter trend move to 62.9, the highest level on that metric in over a year.
The Look Forward
Looking forward to the week ahead, the data calendar is extremely light, with only a few releases on deck that could sway markets one way or the other. The highlights of the week are likely to be include the updated releases on wholesale inventories and import prices. Fed Vice Chair Stanley Fischer will be speaking on Monday at the NABE conference in Washington, speaking on the macroeconomic environment.