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A Disappointing Friday

Wednesday, April 12, 2017

Today's Spotlight Market

The non-farm payrolls for March came in much lower than anticipated. In March, 98,000 jobs were created, lower than the expected 180,000. January's job growth was reduced to 216.000 from 238,000 while February was reduced from 235,000 to a revised 219,000. The unemployment rate fell to 4.5% from 4.7% in February. Retail led job losses led with the loss of 30,000 retail trade jobs. Labor force participation remained the same at 63.0%.

Fundamentals

The non-farm payrolls number diverged sharply from the ADP number of 263,000 jobs. These surveys do use different methodology and the non-farm payrolls are revised twice while ADP does not issues revisions. The non-farm payrolls number can be revised quite drastically. The most famous example is from August of 2011 when the Bureau of Labor Statistics initially released a non-farms payroll figure of zero job growth. This figure was subsequently revised to 110,000 jobs created for August 2011. These revisions are issued in order to incorporate late arriving survey responses. Despite the initial shock of the low number of jobs created, the equity markets close basically flat on Friday. The Fed Futures also are still showing a 67% chance of a Fed rate hike in June. The return of winter and a snowstorm during the data collection period may have influenced the jobs figure for March.

Technical Notes

Turning to the 3-month continuation for the E-mini S&P, we see recent trading has been quite range bound. The 20-day and 50-day simple moving averages have converged with the 50-day SMA serving as support and the 20-day SMA providing resistance. 14-day RSI has also retreated from the 81.11 oversold level in late February to 46.74, which is neutral.

Dale Jennings, Commodity Analyst