This morning's much-anticipated nonfarm payrolls (NFP) report beat expectations for the second straight month, representing a solid employment situation during President Trump's first full month in office. Although this catapulted Wall St higher, the precious metals actually made up some ground after weathering some significant losses this week.
Spot gold nudged slightly higher to about $1,205/oz on Friday, about $10 above its overnight lows. Platinum and palladium were each up 0.4%. Spot silver, meanwhile, was the weakest of the group—albeit still above unchanged right at $17/oz. The metals remain close to five-week lows.
Strong Jobs Report
The data from the Labor Department showed that employers added 235,000 jobs in February. Both January's (238,000) and February's numbers were above the running five-year average of the NFP. Wages were also 2.8% higher year-on-year, according to the report. The labor participation rate ticked up to 63%.
When broken down by sector, retail positions dropped by the most in four years, but manufacturers added more workers than any months since August 2013. Warmer weather also drove a huge jump in construction hiring to start 2017.
Given the positive payrolls report, the markets will now girder for the expected Fed rate hike next week. Economist Ryan Sweet of Moody's Analytics calls the chances of a rate hike at the March FOMC meeting "pretty much a slam dunk."
Despite the rosy employment outlook, one of the other legs of the Fed's case for raising rates is looking a bit wobbly: inflation. Up to now, the running narrative has been that inflation expectations need to rise. The prolonged period of low interest rates ought to have given inflation more room to run, perhaps even overshooting the Fed's 2% target. Yet it seems that one of the main drivers of this inflation has been rising energy prices. Due to a global oversupply, crude oil has lost nearly 5.5% the past two trading days, possibly placing a huge damper on how much inflation is actually accelerating. Both oil benchmarks were down again on Friday, as WTI approached $49/bbl and Brent slipped below $52/bbl.
Wall St opened solidly higher on Friday with the Nasdaq leading the way. Global indices also traded in the green, with most European indices more than 0.5% higher. The Nikkei 225 in Japan jumped nearly 1.5% while shares in Shanghai were slightly lower. One encouraging sign for the Chinese economy is the continued rally for copper prices, which added another 0.45% this morning.
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