Federal Reserve officials and equity and bond bulls saw a good end to the week as April Nonfarm Payrolls data showed both employment and wages softening.

The U.S. Labor Department reported that employment rose by 175,000 jobs in April versus consensus estimates for an increase of 243,000 jobs.  

The unemployment rate ticked up by 0.1 percentage points to 3.9%. The household survey showed the number of unemployed persons rose slightly to 6.5 million, 800,000 higher than a year earlier.

The report also noted the number of people employed part-time for economic reasons rose by 200,000 to 4.5 million in April.

News from key hiring sectors:

• Private sector job creation slowed to 167,000 last month following a revised gain of 243,000 in March.
• Public sector jobs were up only 8,000 in April, well below the revised increase of 72,000 jobs the previous month.
• Healthcare employment stayed robust with the addition of 56,000 jobs and led April’s hiring, followed by employment gains in social assistance (31,000), and transportation and warehousing (22,000).
• The widely watched manufacturing sector saw employment rise by 8,000 in April after shedding a revised 4,000 jobs the previous month.

Looking closer at the data, the average work week in April fell by 0.1 hours to 34.3 hours worked. Average month-over-month hourly earnings rose by 0.2%, or $0.07, to $34.75. Wage growth slowed by 0.2 percentage point to 3.9% versus the year-ago month, and the labor force participation rate remained steady at 62.7% in April. Revised February and March payrolls declined by a combined 22,000 jobs.

Also last week, traders saw better-than-expected readings for Weekly Initial Jobless Claims (+208,000), ADP® National Employment for April (+192,000 jobs), and S&P Global U.S. Manufacturing PMI™ for April (50.0). 

However, ISM Manufacturing PMI® in April (49.2), U.S. Construction Spending for March (–0.2%), and Job Openings and Labor Turnover Survey (JOLTS) for March (8.488 million) all turned in weaker-than-expected results.

The week ahead

This week, traders are expected to focus on Wednesday’s 10-year Treasury Note auction, Thursday’s Weekly Initial Jobless Claims and 30-year Treasury bond auction, and Friday’s University of Michigan Consumer Sentiment Index.

This morning, U.S. stock index futures moved higher in the early hours with the S&P 500® (+0.20%), the Nasdaq-100® (+0.19%), the Russell 2000® (+0.68%), and Dow Jones Industrial Average® (+0.16%) all in the green. 

In Asia, major indexes closed higher, with the Hang Seng (+0.55%) and the Shanghai (+1.16%) posting gains. The Nikkei was closed for a market holiday.

European trading saw the DAX (+0.22%) and the CAC (+0.13%) markets move higher by midday. The FTSE was closed for a market holiday.

Futures on the move

Wheat futures (/ZWN24) rallied on Friday (+3.02%) as dry conditions in the Black Sea wheat-growing areas of Ukraine and Russia have traders pricing in a weather risk premium in wheat futures.  

10-year Treasury futures (/ZNM24) closed higher to end the week (+0.46%) as 10-year yields briefly traded below 4.5% for the first time in over three weeks. Traders said Friday’s softer-than-expected April Nonfarm Payrolls data and April’s ISM Services PMI® data (49.4) posting its first contraction since December 2022 pushed Treasury futures upward.

Coffee futures (/KCN24) closed the week lower (–2.60%), with the July contract finishing at one-month lows. The International Coffee Organization reported global coffee exports rose by 8.1% year over year in March to 12.99 million bags. Increased exports are expected to alleviate concerns about tighter coffee stocks after disappointing production out of Vietnam this past season.

What else to watch today

Major economic reports, trading events, and news items that could potentially impact specific futures markets:

• Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices (interest rate futures)

Treasury Auctions

• 3-and 6-month T-bills