NEW YORK, (Reuters) – U.S. employment growth continued to accelerate in March with the unemployment rate dropping to 3.6%, a record low for the country, and wages reaccelerating. This position allows the Federal Reserve to increase interest rates by a substantial 50 basis points in May.

According to the Labor Department, an employment survey that included establishments was closely followed showed that nonfarm payrolls rose by 431,000 jobs in October.

In February, data were revised to show that 750,000 new jobs had been created instead of the previous reported 678,000. According to Reuters, economists had predicted that payrolls would rise 490,000. After a February of 3.8%, 3.6% was the lowest unemployment rate since February 2020. Story: Table:

MARKET REACTION:

STOCKS: S&P e-mini futures pared a slight gain and were last up 0.3%, pointing to a steady open on Wall Street

BONDS – The benchmark 10-year Treasury note had a yield of 2.4152%. However, the two-year Treasury yields were 2.4239%. It slightly reversed the yield curve.

FOREX was unchanged at 0.23%

COMMENTS:

ANTHONY SAGLIMBENE, GLOBAL MARKET STRATEGIST, AMERIPRISE FINANCIAL, DETROIT

“Today’s report suggests that the labor market should continue to do well, and that’s a great fundamental support for the (stock) market, and in terms of the inversions, the market can look through some of these yield curve inversions, and I would only become more concerned if a greater number of points on that yield curve started to invert. That’s when the market would become more concerned, you’d see buy the dip behavior wane, we’d see investors become more conservative and maybe even more fearful of a recession. But right now, with just a couple of points moving into inversion and then back out, investors should discount that for now and look at the still strong fundamentals in the economy.”

RANDY FREDERICK MANAGING DIRECTOR TRADING AND DERIVATIVES SCHWAB CENTER FINANCIAL RESEARCH

“This was a pretty solid report that was pretty much expected. There is clearly still inflation. This doesn’t alter the Fed’s current actions, or the Fed’s future plans. I think that we’ve already kind of been told not explicitly, but pretty close to that, that we’re going to get a half point right rate hike on May 4.”

“We got PCE numbers yesterday, that show the inflation is still pretty high but we had wages go up about the same amount. So I don’t think that this really changes a whole lot of anything.”

MARVIN LOH – GLOBAL MACRO STRATEGIST STATE STREET BOSTON MASSACHUSETTS

“From the perspective of the Fed and inflation, maybe it was a little bit too good of a number. However, considering that the employment rate continues to decline, it’s clear that the amount of people returning into the workforce keeps pace with those jobs. The rebound in the earnings number also indicates that wages are increasing, though at a slower pace, as we move towards normalization.

JUAN PEZ, DIRECTOR FOR TRADING, MONEXUSA, WASHINGTON

The good jobs figures indicate that the U.S. has shown resilience to the adverse effects of the conflict, as long as post-pandemic recovery is strong. Although the Fed is likely to feel the pressure to continue its hike track, many now question whether the global economy should take on higher borrowing costs. The buck will be volatile as it moves in many directions, as long as we don’t know how much longer the war will last.

JIM PAULSEN CHIEF INVESTOR STRATEGIST, THE LEUTHOLD GROUPE MINNEAPOLIS

    “It’s a decent wage increase but it’s not frightening, like wage costs running out of control. The participation rate was up a bit, and that’s good.

    “What it does is quell fears the economy is falling off a cliff. The report is very positive and doesn’t offer any overheated threats. The report is a mixed bag. It has some good points, but it could be considered benign. This could increase GDP estimates for quarters, which may impact earnings estimates.

    “It helps reduce fears the economy is really slowing or weakening. It’s not. It doesn’t increase inflation fear in any dramatic way.”

“I can’t understand why this report would be a market mover. This is not an anomaly. It was neither super strong nor super weak.”

KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CORPAY, TORONTO

The dollar has been rising due to another strong print, which is supporting expectations of two or more Fed hikes at a jumbo size in the next months. As hopes of a ceasefire between Ukraine and Russia fade, global risk sentiment is continuing to decline. The greenback has been buoyed by this. However, commodity-linked currencies have come under increasing pressure due to policy changes that limit the possibility for future gains.

PAUL NOLTE, PORTFOLIO MANAGER, KINGSVIEW INVESTMENT MANAGEMENT, CHICAGO

According to the data, “the labor market remains very strong.” “The underlying indicator is that the economy still remains strong.”

With wage growth at 5% plus yo-y, it is possible that wage prices will spiral higher. This increases the likelihood that the Fed will raise rates by 50 basis points in their May meeting. The Fed is going to be focused a lot more on inflation at this point, and will be looking to raise rates.”

“I believe the economy remains very strong, and the Fed should be comfortable raising interest rates now, at least initially without worrying about whether they will dump the economy into recession.”

OLIVERPURSCHE SENIOR VICE-PRESIDENT, WEALTHSPIRE AVISORS, WESTPORT CONNECTICUT

    “There doesn’t seem to be anything overly surprising in the jobs report, other than it being relatively strong. This is overall a good report for investors. Even with COVID headwinds and other global events driving inflation that continue, the U.S. economy is resilient. That’s good news. This bodes well for the coming earnings season which will ultimately be the main driver of market returns.

SHAWN CRUS, DIRECTOR DERIVATIVES STRATEGY TD AMERITRADE CHICAGO

“It was the wage increase, it wasn’t awful but if there was one thing I noticed yesterday was when we got the income and expenditures was that there was a little bit of a slowdown in spending and some people could view that as just not keeping up with inflation. And it doesn’t look like the wage growth here was quite enough to keep up with some of the inflation we are seeing either, so there is a little bit of concern around what does that mean for consumer spending, that is one area that might create some concern.”

“Generally speaking, there was a little bit of an expectation that maybe a lot of this inflation was going to start pulling people back into the labor market, getting more people back to work, and undershooting that a little bit is another area where there is going to be a little bit of concern as well. But there is still enough of a wage increase component in this – average hourly earnings were up 5.6% – which is still a decent jump where that keeps the Fed in the spot where that is still inflationary and that is still going to keep the expectation that everyone had before that they are going to have to tighten in place.”

“Right now the catalyst is wages not keeping pace with inflation but inflation also forcing the Fed to continue to have to tighten policy aggressively.”

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

“It’s decent report, but it carries wage pressures and a half-percent (interest rate) rise at (the Fed’s) May meeting is a near certain. And if inflation accelerates even further then at the June meeting, we’re looking at another half-percent rise.”

“Basically, the report is good, but it just means the Fed is going to get more hawkish.”

“In terms of the market, it’s coming off a little bit. The dollar is rising faster and yields are increasing. It’s the beginning of a new quarter, we’ll probably have a mixed to positive trading session based on the news.”

(Compliled by the global Finance & Markets Breaking News team)