Friday (March 5) 21:30 Beijing Time, the U.S. February quarterly non-farm payrolls released. The U.S. non-farm payrolls rose by 379,000 in February, better than market expectations and the largest increase since October last year. The U.S. unemployment rate recorded 6.2% in February, a new low since March last year.
After the release of the non-farm payrolls data, spot Gold fell an accumulated $8 to a low of $1,687.34 per ounce, while spot silver lost $25.
The U.S. dollar index rebounded above the 92 mark, non-U.S. currencies were under collective pressure, the euro was 40 points lower against the dollar in the short term, now at 1.1910; the pound was 30 points lower against the dollar in the short term, now at 1.3788; the dollar was 30 points higher against the yen in the short term, now at 108.56. The yield on the U.S. 10-year Treasury note rose to 1.62%, more than the high since Feb. 25.
But about 15 minutes after the data was released, gold and silver losses narrowed, with spot gold back on $1,700 per ounce, up 0.2% intraday, and spot silver recovering the $25 mark as the U.S. 10-year Treasury yield fell back to 1.59%.
Job market is recovering, focus on next month’s non-farm payrolls
The U.S. Department of Labor said most of the new jobs in February were in the leisure and hospitality sector, with fewer new jobs in temporary help services, health care and social assistance, retail trade and manufacturing; employment fell in construction and mining, state and local government Education and other sectors.
In addition, the change in total nonfarm payroll employment in December was revised downward by 79,000, from a decrease of 227,000 to a decrease of 306,000, and the January value was revised upward by 117,000, from an increase of 49,000 to an increase of 166,000.
It is worth noting that the previous employment reports for January and last December were successively disappointing. Overall, the U.S. economy still has about 9.9 million fewer jobs than it did before the pandemic. But last month’s and this month’s nonfarm payroll reports hinted that job growth may have accelerated as fewer new cases of coronary pneumonia and expanded vaccinations helped more businesses reopen at greater capacity.
One other notable indicator is the unemployment rate, which is still above its 50-year low of 3.5% since February 2020. Financial news site MarketWatch found that about 4 million more people have dropped out of the labor force since the outbreak but are not counted as unemployed. Another problem is that some workers who are permanently unemployed have been telling the government they are only temporarily unemployed.
To better understand just how many people have actually lost their jobs, attention needs to be paid to a lesser-known unemployment rate, U6, because it covers those who are too depressed to look for work and those who can only find part-time work. Because the U6 is often referred to as the real unemployment rate, it was as high as 11.7% in January.
Canadian Imperial Bank of Commerce believes that although bad weather affected mobility during the survey reference week, the cold snap arrived in Texas only in the latter part of that week, suggesting that it will have little impact on this month’s nonfarm payrolls data, but that the impact will be reflected in total hours worked. In other words, next month’s nonfarm payrolls data could be significantly discounted as a result.
Other reports on the U.S. labor market have also been mixed recently. ADP showed that private sector employment rose by only 117,000 in February, much lower than the 205,000 expected. Elsewhere, however, weekly jobless claims trended lower in February than in January, indicating a moderation in the number of new jobless.
Market Commentary: “Good news is bad news”
Analyst Chris Anstey said the labor force participation rate remained unchanged and we are still in the depths of unemployment since the outbreak, but the message so far is that the labor market is recovering after a tough winter.
Employment growth in the high-touch service sector is accelerating as the Newcastle pneumonia outbreak is receding. And with the gradual expansion of vaccinations, we will see cases continue to fall and people can get outside for consumer activities, which will help the economy boom, especially in the service sector.
Total employment in the U.S. is still 10 million below its peak in February 2020, so adding 379,000 jobs does not fill the gap. At this rate of job growth, it will take two years and four months to make up for the losses from the Epidemic, and we need to see the job market recover at a faster pace.
Analyst Ian Lyngen also noted that the non-farm payrolls report released today confirms the optimism that has guided the market so far in 2021. Before the release of the data, the volatility of the U.S. bond yields was modest, but after the release of the data, the yield of the 10-year Treasury note moved briefly higher, rising to 1.624%. The only risk to Treasury yields now comes from risky assets, especially given the Fed’s non-interventionist stance; in addition the credit risk index continues to move lower.
However, the financial website Forexlive specifically noted that in this report, good news is bad news. U.S. 10-year Treasury yields then immediately rose above last week’s highs and the dollar moved higher. This put pressure on U.S. equity futures.
About the stimulus bill ……
Just before the release of the non-farm payrolls, the US Senate just voted on Biden‘s epidemic relief plan. With all 50 Republican lawmakers voting against it, Vice President Harris cast the crucial tie-breaking vote and the Democrats passed the said vote in the Senate with difficulty, but the really tough part lies in the subsequent formal consideration process. King also noted earlier that the Senate will have to work overtime on weekends to push the plan through, even though the consideration process will take dozens of hours.
If the Senate passes the plan, the House is scheduled to approve it by the middle of next week. Democrats aim to get the bill to President Biden’s desk by March 14, when the $300-a-week increase in unemployment insurance and benefits for millions of people will officially expire. The Century Foundation estimates that 4 million people will lose benefits at that time, and another 7.3 million will lose benefits in the next few weeks, which could add up to more than 11 million people.
Gold 10’s non-farm payrolls foresight has been mentioned, the U.S. non-farm payrolls data performance better than expected, will increase the economic overheating concerns, the dollar will rise further, the U.S. bond yields will also climb further.
Analysts at TD Securities expect that gold prices may fall towards the area of $1660 per ounce. Gold is looking for a bottom, but it will only be possible if the Federal Reserve takes convincing action to stop Treasury yields from rising. A stronger dollar, as well as spot traders selling gold to raise dollars for higher yields, will drive money out of gold as an asset.
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