Non-farm payrolls exceeded expectations, delaying rate cuts; U.S. Treasuries under pressure, U.S. stock index futures edge down, and the dollar strengthens.

Strong employment data suppresses expectations of rate cuts, U.S. Treasury markets come under pressure, and the U.S. dollar strengthens. Due to the holiday, the U.S. stock spot market was closed all day.

According to WallstreetCN, U.S. nonfarm payrolls increased by 178,000 in March, surpassing market expectations, and the unemployment rate unexpectedly slipped. Due to Good Friday, U.S. stock and most major markets were closed on Friday, while the U.S. Treasury market was only open half day.

After the data was released, yields on the rate-sensitive 2-year U.S. Treasury rose 6 basis points to 3.86%, and the 10-year yield simultaneously increased by more than 5 basis points.

U.S. stock futures also fell, with S&P 500 futures down 0.3% and Nasdaq 100 futures down 0.4%. Prior to this, Asia-Pacific stock markets generally rose, boosted by news that Iran and Oman could reach an agreement on regulating passage through the Strait of Hormuz.

However, some data provided a buffer against rate cut expectations. Previous February nonfarm data was revised, showing greater job losses than previously reported, and March wage growth also slowed more than expected, somewhat offsetting the potential inflationary pressure from strong employment data.

Tony Farren, Managing Director of Rates Sales and Trading at Mischler Financial Group, said:

This data will not push the Fed toward a rate hike, but it also does not help the case for cutting rates.

Jefferies Chief U.S. Economist Thomas Simons wrote in a client report that this report is unlikely to substantially change the Fed’s policy path. Thomas Simons said:

The data largely reflect past conditions and may not yet include the impact of recent energy price increases or risks related to war with Iran. For now, there is no indication that the Fed needs to take immediate action.

Despite the disruption from employment data, the market’s underlying driving force remains the development of the Middle East war.

WallstreetCN mentioned, citing Xinhua and U.S. media reports on Friday, that Iran has formally informed mediators it does not wish to meet with U.S. officials in Islamabad, Pakistan, in the coming days, and made clear that U.S. demands regarding a ceasefire are unacceptable.

Additionally, CCTV cited U.S. media reports that two U.S. fighter jets may have crashed on Friday. Trump said that the downed jets would not affect negotiations. The dual setback from warfare and diplomacy has deepened concerns about the Middle East situation among market participants.

According to the latest poll jointly released by CCTV and Ipsos, 86% of U.S. respondents are concerned about the safety of U.S. military personnel, 56% believe the conflict will negatively impact their personal finances, and more than three-quarters of respondents oppose sending ground troops to Iran.

Max Gokhman, Deputy Chief Investment Officer at Franklin Templeton Investment Solutions, said:

Asset prices are shaking violently with every headline. Until a clear agreement is reached and an acceptable plan for reopening the strait is made, economic growth will continue to be pressured and overall inflation will face upward risks. This spells indigestion for both stock and bond investors.

Rina Oshimo, Senior Strategist at Tokyo’s Okasan Securities, pointed out:

The market is highly alert about possible developments over the weekend, especially as it’s the first weekend after Trump’s national speech. If attacks escalate or retaliatory actions break out, oil prices may remain elevated for a longer time.

Markets were closed on Friday due to the holiday. On Thursday, oil prices closed at extremely high levels, with WTI crude over $110 and Brent near $109.

Strong employment data boosted the dollar, and G10 currencies generally weakened. The cryptocurrency market was also under pressure, with Bitcoin falling 0.3% to $66,704.70 and Ethereum down 1% to $2,047.83.

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