Read the highlights of this week’s commentary from Helios:
The Fed raised rates by 50 basis points as expected as well as starting to shrink its balance sheet next month. More notable news came during the press conference when Powell appeared to nix the possibility of a 75 basis point hike (for now) saying the Fed is not actively considering it and 50 basis point hiked are on the table for the next “couple” of meetings. The 10-year yield fell on Wednesday, only to rise again Thursday and Friday.
While the market rallied on Wednesday, with the S&P 500 up 2.99%, seemingly liking the Fed’s comments. However, that positive sentiment quickly and aggressively turned Thursday, with the S&P 500 losing 3.56% and NASDAQ Composite falling 4.99%, both the worst single-day moves since 2020.
The labor market continues to gallop with 428,000 new jobs in April, while economists had expected 380,000. The unemployment rate was unchanged at 3.6%, with a slightly declining labor force participation rate. Average earnings rose, though at a slightly slower pace than March. With the labor force shrinking slightly, it will make the already tight jobs market even harder for companies to navigate, and may complicate the Fed’s path as well, as companies may be forced to offer even higher wages to attract talent.
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