May 5, 2017
Employers are hiring and the unemployment rate keeps coming down but wages aren't showing much traction. Nonfarm payrolls rose a better-than-expected 211,000 in April with the unemployment rate falling to a 16-year low of 4.4 percent. Average hourly earnings did manage a 0.3 percent monthly rise but the prior month was downgraded to 0.1 percent and with the year-on-year rate going into reverse at 2.5 percent. Tightness in the labor market does point to a Federal Reserve rate hike in June, but weak wages which won't be helping consumer spending much.
The Dow firmed 0.3 percent on the day to end the week at 21,006 for a weekly increase of also 0.3 percent. Down nearly 6 percent to $46.30, oil had a very bad week on concerns of oversupply. The dollar also had a soft week, down 1.4 percent on the dollar index to 98.56 and reflecting both the mixed tone of U.S. economic data and also strength in the euro as the outlook dims for Le Pen's National Front Party. Less risk for Europe means less safe-haven demand for Treasuries where yields climbed in the week, up 6 basis points for the 10-year to 2.35 percent.