A collective sigh of relief swept over Wall Street last Friday as the latest Non-Farm Payroll report once again exceeded expectations. The US economy added 177k new jobs in April, beating the predicted figure of 130k, while unemployment held steady at 4.2%. The number of new jobs created in March was revised to the downside, bringing the previous month’s figure down to 185k, still beating expectations of the time. The data print allowed US indices to continue their ascent, with the Dow, S&P 500 and Nasdaq Comp all adding around 1.5% to their valuations. The latter two indices have now fully recovered from the post “liberation day” dump.
In all likelihood, the jobs report will do little to convince the Fed to move the needle on interest rates during the meeting on Wednesday. Trump famously called out Jerome Powell recently for not bringing down interest rates sooner, but the two main remits of the Fed are employment and inflation, both of which have displayed promising results over the past few months. The interest rate prediction market is all but convinced that the Fed will not budge this week.
The same cannot be said for the Bank of England, which is expected to bring down rates on the Pound Sterling on Thursday, from 4.5% currently to 4.25%. Said interest rate decisions are the only real events of substance in an otherwise very dull economic calendar this week. Today promises to be extra boring given the market closures in the UK and across Asia. In the absence of much else going on, there is a chance that the conversation will once again shift back to the fascinating topic of trade tariffs, but another developing story is the drama unfolding in the oil markets. OPEC+ has decided to accelerate production hikes despite dismal global demand forecasts, pointing to the group’s willingness to tolerate lower oil prices. A nightmare scenario for oil bulls, who collectively threw in the towel this morning, with Brent Crude collapsing to $59 a barrel and WTI falling to just $56.
In other news, Warren Buffett announced on Saturday that he plans to step down as CEO of Berkshire Hathaway (BRK.A, BRK.B) by the end of the year, ceding his position to vice-chairman Greg Abel. Buffett, who turns 95 this year, has presided over Berkshire Hathaway since 1970. Shares in the company have risen over 18% already this year.
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