NFP Analysis: The US economy is on fire, Gold set to rust, US Dollar to shine until the CPI release

Did Neel Kashkari get an early notice of the strong jobs report? Hawkish comments from the President of the Minnesota Fed late on Thursday triggered wild action in markets – and for good reasons.

The US economy gained 303,000 jobs in March, smashing estimates of around 200,000. They also exceeded real market estimates, which were buoyed by a robust ADP private-sector jobs report. 

What about revisions? They did not make a material difference. The data for February was revised down from 275,000 to 270,000, a minor change compared to the considerable changes reported last month.

No less importantly, wage growth remains solid. While monthly Average Hourly Earnings rose by 0.3% as expected, the unrounded change was 0.347%, which was a whisker away from being rounded up to 0.4%. Moreover, it came on top of an upward revision to the previous month.

The US Dollar advanced across the board, and the increase in US Treasury yields is weighing on Gold. I see these reactions as justified, and expect them to persist also once the dust settles. 

Stock markets have taken the news with a stride. A strong labor market means higher rates for longer, but it also implies better gains for companies. It is not all bad news.

What's next? Investors are set to accept that a rate cut in June is drifting further away – at least until the US releases its Consumer Price Index (CPI) report on Wednesday, April 10. Fireworks will likely be even wilder than in this Nonfarm Payrolls report.