On March Jobs Report

178,000 net payrolls smashed the consensus for 65,000, and overshot our model’s estimate of 137,000. Last month’s large contraction was made even worse with significant downward revisions. This is now yet another in a multi-month streak of alternating gains and contractions with a slightly positive average. Powell remarked on this oscillation at March’s FOMC, and believes private sector payroll growth has in fact been zero for the last six months. Recognizing it as a “balance,” he nevertheless senses downside risk. We do not, seeing the cessation of immigration as the primary cause – which Powell sees, too. While a second-in-a-row large contraction would have deflected the Fed to the dovish, March’s strong growth will not deflect it to the hawkish. We still forecast at least one rate cut this year, expecting the Fed to continue to sidestep the global mania mistaking an oil price shock for inflation.