Following a series of recent weak economic activity data USAwhich indicates that a significant tightening of monetary policy Federal Reserve Bank (FRS) is beginning to have an impact, the results of the Non-Farm Employment Survey announced last Friday were further evidence that the labor market is also starting to show signs of weakening, albeit moderately. Characteristically, new jobs rose in March by about as much as the market expected, 236,000, the unemployment rate fell from 3.6% to 3.5%, approaching the lowest level in about 50 years set two months ago, in while the annualized rate of average hourly earnings remained on a downward trend, falling to 4.2% from 4.6% the previous month but remaining above what has historically been considered consistent with the Fed’s inflation target.

As markets have stabilized in recent days following the recent turmoil in the US and European banking sectors, as a result of timely and effective interventions by the authorities that eliminated fears of systemic risk, the US data, which did not contain negative surprises, increased investors’ expectations for another Fed rate hike. Assuming that any slowdown in US economic activity in the first quarter of 2023 is relatively limited (according to the Federal Reserve Bank of Atlanta, annual GDP growth rate for the first quarter is estimated at 2.2% from 2.7% in the last quarter of 2023 .). 2022), the likelihood that the futures market will rise in price by 25 basis points. interest rates at the next monetary policy meeting on May 3 strengthened to 75% from about 50% the previous week.

The rate hike is also expected to mark the end of the current cycle of rate hikes, as the size of the impact on the real economy of the expected credit tightening following the recent banking sector turmoil remains uncertain. Officials emphasize, however, that the bank does not intend to cut interest rates in 2023.

Data on the labor market put pressure on US and Eurozone government bonds, especially short-term ones, while in the currency markets the pressure on the dollar was exerted by the euro / US dollar. will be close to the highest level so far this year, 1.1033, set in early February.

* Department of Financial Analysis and Research of International Capital Markets of Eurobank.