The U.S. added 20k jobs in February

Posted: Friday, March 8, 2019 - 09:46 EST

The U.S. added 20k jobs in February, well below expectations of 180k. The prior month’s data was revised higher by 12k to 308k. Wage growth increased by 0.4% over the month, resulting in average hourly earnings growing at 3.4% over the year. The labour force participation rate remained at 63.2% and unemployment increased by 0.1% to 3.8%.  Manufacturing payroll growth slumped to 4k and leisure and hospitality showed no growth over the month. With respect to the surprisingly weak job numbers, the U.S dollar and S&P are trading lower and bonds are rallying.

North of the border, Canadian jobs in February climbed by 56k, well above expectations of 1.2 k, driven by strong hiring in the private sector. The unemployment rate remains at 5.8%, supported by a strong participation rate at 65.8%. The healthy Canadian job market has been one bright spot in the Canadian economy battling several other headwinds. This morning housing starts came in at 173k well below expectations of 205k in February. There is a broad slowdown in both multi-unit construction and single family starts, suggesting we will see another weak quarter of residential investment in Q1. 

Growth concerns and dovish central banks continue to weigh on markets. Yesterday’s sell off in equities intensified the credit sell-off, pushing spreads 3-5 bps wider. With investors looking to de-risk their portfolios, we saw selling in BBBs and NVCCs and buying in higher quality financials and A rated utilities. This theme is also being reflected in fund flows, this week we see globally $8.8 bn of funds flow into bonds, $1.2 bn out of gold and $10 bn out of equities.

Equity Markets:

  Index Level % Change QTD YTD Q3 2017 Q4 2017 Q1 2018 Q2 2019 Q3 2019 Q4 2019
S&P 500 2,748.93

-0.81%

10.10% 10.10% 4.48% 6.64%

-0.76%

3.43% 7.71% -13.52%
TSX

16,056.51

-0.22%

12.65%

12.65%

3.68% 4.44%

-4.52%

6.77% -0.56% -10.11%

Rates:

 

Today

% Change

QTD change

YTD change

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Canada 5 Year

1.63%

-0.06% -0.25% -0.25% 1.75% 1.87% 1.97% 2.07% 2.34% 1.89%
Canada 10 Year 1.76% -0.06% -0.20% -0.20% 2.10% 2.05% 2.09% 2.17% 2.43% 1.97%
Canada 30 Year 2.06% -0.06% -0.12% -0.12% 2.47% 2.27% 2.23% 2.21% 2.42% 2.18%
30yr Generic Corporate A rated Spread 1.50% 0.00% 0.00% 0.00% 1.24% 1.21% 1.24% 1.28% 1.30% 1.50%
30yr All-in Corporate A rated Yield

3.56%

-0.06% -0.12% -0.12% 3.71% 3.48% 3.47% 3.45% 3.72% 3.68%
US 10 Year 2.63% -0.01% -0.06% -0.06% 2.33% 2.41% 2.74% 2.86% 3.06% 2.69%
CDX IG 65.534 1.586                

The information contained herein is intended for advisors for general information only and is compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made as to its accuracy. All opinions contained in the commentary and expressed by the portfolio manager are subject to change without notice and are provided in good faith without legal responsibility. All market data is sourced from Bloomberg.