The economic data released by the United States yesterday were mixed. The ADP employment data in the morning was stronger than expected, with the number of employees increasing by 184,000. The previous value was also revised up by 15,000. The wage growth of job changers was particularly prominent, with an annual increase of more than 10%. The accompanying commentary pointed out that the largest wage growth occurred in the construction, financial services and manufacturing sectors.
On the other hand, the ISM Services Index fell 1.2 points to 51.4 in March, and prices paid fell sharply (-5.2 points), the lowest level since March 2020. The remaining components were mixed, but the weakness in the prices paid and employment components temporarily prevented bond yields from continuing to rise.
Atlanta Fed President Bostic reiterated his hawkish stance, insisting on only one rate cut in the fourth quarter, but he also said it depends on whether his economic views come true, but he has not yet received any information about a weakening job market. .
Powell, on the other hand, struck a more dovish tone, insisting that the process of slowing inflation will continue despite strong economic growth and suggesting that interest rates are currently at restrictive levels and need to be lowered. In addition, his Q&A was also full of dovish details, such as "Productivity improvements may exceed output," "Significant population growth may help reduce inflation," regarding capacity pressure, "There may be more growth on the supply side that can be achieved," etc. .
The 10-year U.S. Treasury yield remains at this year's high, but there hasn't been much concern yet, though that could prove to be a headwind for stocks in the second quarter.
Friday's non-farm payrolls data is expected to remain strong with a slight slowdown, but the wide divergence between agency surveys (strong) and household employment data (weaker) will remain a major source of uncertainty. Given the recent decline in fixed income, the market is likely to be hawkish when the data is released, and if the non-farm payrolls data is weak, the probability of a rate cut in June may rise back to above 75%.
On the crypto side, ETF inflows were significantly stronger yesterday, with both Fidelity and Blackrock seeing large inflows, offsetting ARK’s unexpected outflows the day before, bringing total net inflows to $220 million, including Grayscale’s $75 million outflow, with ETF inflows helping to keep BTC prices stable around $65,500.
