Excellent April Jobs Report Fails to Whet Risk Appetitie

Economic Data

- (IN) India Forex Reserves w/e April 25th: $309.9B v $309.4B prior
- (ZA) South Africa Apr Naamsa Vehicle Sales Y/Y: -10.7% v -0.2% prior
- (CZ) Czech Apr Budget Balance (CZK): 26.6B v 43.6B prior
- (US) Apr Change in Nonfarm Payrolls: +288K v +218Ke; Change in Private Payrolls: +273K v +215Ke; Change in Manufacturing Payrolls: +12K v +8Ke
- (US) Apr Unemployment Rate: 6.3% v 6.6%e (lowest since Sept 2008); Underemployment Rate: 12.3% v 12.7% prior; Labor Force Participation Rate: 62.8% v 63.2% prior; Change in Household Employment: -73K v +250Ke
- (US) Apr Average Hourly Earnings M/M: 0.0% v 0.2%e; Y/Y: 1.9% v 2.1%e; Average Weekly: 34.5 v 34.5e
- (BR) Brazil Apr Manufacturing PMI: 49.3 v 50.6 prior; first contraction in 5 months
- (MX) Mexico Apr Manufacturing PMI: 51.8 v 51.7 prior
- (US) Apr ISM New York: 50.6 v 54.0e
- (MX) Mexico Mar Total Remittances: $2.06B v $1.90Be
- (US) Mar Factory Orders: 1.1% v 1.5%e

- US equity markets are discounting the impressive April jobs report just as they discounted the very weak Q1 GDP report on Wednesday. Equities made slight gains in the first hour of trading but are back to unchanged. As of writing, the DJIA is down 0.12%, while the S&P500 and Nasdaq are flat.

- The April jobs report greatly exceeded expectations with the strongest NFP growth since January 2012 (wonks highlighted that the consensus view of +288K was the highest since 2006). Gains were broad-based across sectors, including construction. Most importantly, nothing in the data suggests the increase in the payroll series was a statistical fluke. The same cannot really be said for the unexpectedly steep decline in the unemployment rate to 6.3%, its lowest point since September of 2008. The decline did not reflect an increase in employment - as measured by the household survey, employment actually fell by 73K - but rather the 806K workers reporting themselves as being out of the labor market, pushing the labor force participation rate down 0.4 points to 62.8%. Analysts highlight that this is a very noisy measure and will certainly be revised.

- The lagging March factory orders report rose for a second straight month in March (but less than expected), lending further support to the view that US manufacturing is solidly recovering. This complements nicely the strength seen in yesterday's private ISM and Markit April manufacturing reports.

- Portugal has passed the final bailout audit by IMF-EU experts, in a major step towards becoming the second eurozone nation after Ireland to exit bailout proceedures after Ireland. Portugal is now set to emerge from the bailout on May 17 and begin funding itself in public bond markets without a net.

- Currencies, fixed income and precious metals zigzagged in the wake of the jobs report as traders tried to get a fix on the quality of the data. EUR/USD dipped from 1.3862 to 1.3815 by the open but has returned right back to where it was before the report. USD/JPY tested above 103 before dropping as low as 102.15. Spot gold is up 1.5% to just above $1,300. The benchmark 10-year yield turned around and went as high as 2.680% before dropping back below 2.580% to test February lows.

- Chevron missed both top- and bottom-line expectations as production fell 2% y/y and average prices for its crude declined 3% y/y. The company's CEO attributed lower prices and profits to global economic factors, pinning most of the drop in production on bad weather in Kazakhstan. Shares of CVX are off their lows to flat on the session.

- Pfizer hiked its offer for AstraZeneca to approx £50.00/shr (1.845 shares in the combined entity and 1,598 pence in cash), raising the total deal offer to £64B. Astra rejected the offer again, and UK government officials started talking about the need to very closely scrutinize the proposal. 

Looking Ahead

- (IT) Italy Apr Budget Balance: No est v -€18.4B prior
- 12:00 (IT) Italy Apr New Car Registrations Y/Y: No est v 5.0% prior
- 13:00 (MX) Mexico Apr IMEF Manufacturing Index (Seasonally Adj): 53.5e v 52.7 prior; Non-Manufacturing Index (Seasonally Adj): 51.2e v 51.2 prior
- 14:00 (BR) Brazil Apr Trade Balance: $250Me v $112M prior; Total Exports: $19.2Be v $17.6B prior; Total Imports: $18.9Be v $17.5B prior
- 21:00 (CN) China Apr Non-manufacturing PMI: No est v 54.5 prior