Payrolls Setback

The US employment outlook proves less picturesque than previously thought after an unambiguous disappointment in the latest labor data release. US nonfarm payrolls rose 126,000, vastly underperforming consensus expectations of 245,000 jobs added. The unemployment rate remained stable at 5.50%, but the downward revisions of January and February’s official data is concerning. Nearly 70,000 jobs were subtracted from the prior months, highlighting that the overly exuberant labor recovery expectations might need to be modified. Other setbacks include the drop in labor force participation, with over 93 million eligible Americans no longer employed, the lowest since 1978. The kneejerk reaction to the news was largely negative, sending US equity benchmarks negative for 2015 as a crash in the dollar sent commodities soaring.

The anemic jobs gains stoked anticipation that the Federal Reserve will have to postpone its rate hike time line as the economy reverses from growth. With the move lower in the dollar, commodities strengthened, led by the gains in precious metals. The energy complex also moved higher despite the interim arrangement reached with Iran that set an outline for the terms of a nuclear deal that curbs the nation’s ambitions. No imminent lifting of sanctions however continues to weaken the Iranian economy despite the fact that the nation has the third largest oil reserves and fourth largest production capabilities of the current global energy paradigm. After falling below $50 per barrel on the outline announcement, oil has ticked higher as unrest in Yemen continues to spread and the Saudis leave the ground operation option on the table. European markets will be closed today in observance of Easter Holiday will business will remain as normal in the United States after the market holiday on Friday.