On the March Jobs Report

196,000 net payrolls is a small upside surprise on top of upside revisions, but it’s a mystery why February’s anomalously low numbers were revised so little higher. March’s data contradicts the seeming recession warning in February’s, as does the move to new unemployment claims to the lowest in the history of the data, all the more so considering the size of today’s labor force. The only deflationary signal today is the slowdown in monthly average hourly earnings growth, and a downward revision to February’s. But this gives the Fed plenty of runway to continue to be patient, or even bow to the dove case now being made more insistently by Trump, and soon from within the Fed itself by Moore and Cain. We continue to think bonds have reacted mistakenly to recession fears and the March FOMC, and expect yields to continue to back up further from last week’s panic bottom.