Aurelia Butler

Nonfarm payrolls increased by 175,000 jobs last month, the Labor Department said in its employment report on Friday. March was revised up to show payrolls rising by 315,000 jobs instead of 303,000. Economists polled by Reuters had forecast payrolls advancing by 243,000. The unemployment rate rose to 3.9% from 3.8%. Wages increased 3.9% in the 12 months through April after rising 4.1% in March.MARKET REACTION:STOCKS: S&P 500 e-mini futures added to gains and were up 1.1% pointing to a strong open on Wall StreetBONDS: The U.S. Treasury 10-year yield fell and was last at 4.50%; Two-year yields fell to 4.772%FOREX: The dollar index retreated 0.61%, while the euro was up 0.62%COMMENTS:TIMOTHY CHUBB, CHIEF INVESTMENT OFFICER, GIRARD, WEST CHESTER, PENNSYLVANIA”Market response is a sigh of relief. It was important to see wage growth moderate and not accelerate especially in the context of the inflation story.””It’s too soon to price in more rate cuts. One number doesn’t make a trend. Overall, the Fed is getting the evidence it needs.” “A lot of job growth was driven by immigration recently which is good for wage growth coming down as a lot of these jobs are on the lower end of wage growth. This is a continuation of progress, both in the inflation picture and decelerating growth.””We’re starting to get a little bit more clarity into what is this landing going to look like. We’ve been calling for a hard-ish one. It’s certainly been delayed and not denied.” “Ultimately, we’re starting to see more durable progress on the economy and inflation decelerating, in a way that’s not violent or dramatic. It’s been coming in pretty softly so far.”BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN“The labor market just took one big step towards coming into better balance. There’s nothing wrong with payrolls rising by 175,000. The danger is that the move from hot to mild doesn’t stop there and it turns frigid. The risks would be greater if the Fed was still intent on hiking, but its patient pause keeps the risks of overshooting to the downside low.”JASON PRIDE, CHIEF OF INVESTMENT STRATEGY AND RESEARCH, GLENMEDE, PHILADELPHIA    “The data’s soft across the board from the Fed’s perspective, which is what really matters here and an unemployment rate of 3.9% is not something disastrous. This indicates an economy that is not declining dramatically, but it definitely indicates a looser labor market.”    “The Fed’s looking for data points that pull them back away from this tighter-for-longer thought process. The one caveat would be that the labor market reports are notoriously fickle and what we see this month might not be what we turn around and see next month. It gives the Fed some hope, but it does not establish the trend for them.”PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK“This report is not too hot not too cold and it’s just what the Fed wants to see. We’re not seeing a pickup in wages we’re still producing jobs, and the economy is doing well.”“However, the key to the report is wages which came in a little bit cooler than the market was looking for.” “It’s a good report for the Fed and it’s a good report for the markets.”“We need more evidence, but if we continue on this path, then I think that could change the timing of a rate cut, and it could mean instead of one, we might be looking at two rate cuts this year.”QUINCY KROSBY, CHIEF GLOBAL STRATEGIST, LPL FINANCIAL, CHARLOTTE, NORTH CAROLINA:    “The jobs report came in lower than expectations. However, you can see from the market’s reaction that it is a welcome number for the market. The market at this point is so hoping that the Fed can cut rates this year and did not want one of the hot numbers coming in. Today’s report certainly offers them a cooler read of the labor landscape. In addition, and even more importantly, the unemployment rate ticked a bit higher… What this suggests is a bit of a cooling in the labor market. The reason it’s important for the stock market is the stock market is looking for any signals that perhaps inflation will start to come down as the labor market cools, even at the margin. So this is market friendly.”    More

PARIS (Reuters) -Societe Generale shares fell more than 5% on Friday after the bank’s CFO flagged that net interest income in 2024 from the group’s French retail business would be at the lower end of guidance.The French bank’s shares had earlier gained more than 5%, hitting their highest since March 2023, after SocGen reported first-quarter results that beat analysts’ forecasts.”We are today at the lower range of this guidance and of our projections,” Chief Financial Officer Claire Dumas told analysts, referring to the retail business.SocGen had previously given guidance that the retail businesses net interest income to reach a level at least equal to 2022.Several analysts pressed Dumas on the French retail division’s prospects, asking for more details on the business whose results are bundled with private banking and insurance.”The market was a little bit concerned about the NII guidance,” said Johann Scholtz, an analyst at Morningstar. “I think that is probably what is driving the weakness,” he said, referring to shares.French banks, including SocGen, have not benefited as much from the rise in central bank interest rates because of the high cost of deposits in France. Their shares have underperformed, although analysts expect them to do better when rates fall. SocGen shares are up just 2% so far in 2024, following Friday’s fall. That compares with a 17% gain for the STOXX Europe Banks 600 index. The bank said in its first-quarter results presentation that NII at its French retail, private banking and insurance division was up 3% from the last quarter of 2023 to 822 million euros, “at the lower-end of the range of projected.” SocGen, whose French retail activity has more weight on its earnings than bigger rival BNP Paribas (OTC:BNPQY), said a transfer from sight deposits to regulated savings account with a fixed interest rate weighed on its results. This came on top a costly hedging policy aimed at protecting the bank against low rates but which backfired. It cost SocGen 300 million euros in the first quarter, on top of 1.6 billion euros in 2023. It said it expected about 150 million euros additional drag from these short-term hedges in the second quarter before being done with them. A recent study by UBS found that French deposits were the most expensive in Europe when rates were negative. But they increased in cost just as quickly as the European average when rates and inflation rose.UNAUTHORISED BETS SocGen’s CEO Slawomir Krupa defended the bank’s risk controls on Friday after news this week that two traders in Hong Kong had left the bank late last year when they were found to have made unauthorised bets via options contracts tied to Indian stocks.Krupa told reporters the trades were “normally detected by the control system”.SocGen’s first-quarter earnings fell less than expected as profits on equity derivative sales offset weaknesses at its retail bank and in fixed-income trading.France’s third-biggest listed lender said group net income over the first three months of the year was 680 million euros ($729 million).This was down 22% from a year earlier but still beat the 463 million euro average of 15 analyst estimates compiled by the company. Sales slipped 0.4% to 6.65 billion euros, above analysts’ 6.46 billion euro average estimate.French rival Credit Agricole (OTC:CRARY), which also reported earnings on Friday, posted a forecast-beating 55% jump in first-quarter net profit, driven by corporate and investment banking sales. Helped by euro zone interest rates remaining higher for longer than expected, many European banks have beaten expectations for the first quarter, and some have raised profit targets for the year.Krupa, who took over just a year ago, has pledged to revive shares by trimming costs, while selling non-core assets and investing to deploy online bank BoursoBank and car-leasing group Ayvens.($1 = 0.9324 euros) More

Investors secured a net $4.86 billion worth of global equity funds during the week, marking their first weekly net buying since March 27, data from LSEG showed. Regionally, Asian equity funds attracted a net $5.68 billion, marking the largest weekly inflow since March 27. Meanwhile, investors put $4.46 billion into European funds and withdrew $5.48 billion from U.S. funds.Federal Reserve Chair Jerome Powell kept rates steady on Wednesday, indicating future rate cuts may be delayed due to persistent inflation.”The delay in Fed cuts is likely to postpone rate cuts in Asian markets, but that does not derail an ongoing Asian export, industrial, and real growth recovery, thanks to a supportive U.S. economy and improving Chinese growth,” said Mark Haefele, chief investment officer of global wealth management at UBS.”We see several areas of dip-buying opportunities in the region that investors can consider despite a return in market volatility.”Among sector funds, technology received $408 million, marking its first weekly inflow in four weeks. Conversely, the healthcare and consumer discretionary sectors each faced net outflows of nearly $800 million.At the same time, bond funds attracted $6.69 billion worth of inflows, the largest amount in a week since April 10.Government bond funds had $1.54 billion worth of net purchases in contrast to $773 million worth of net selling in the previous week.Loan participation and dollar-denominated mortgage bond funds drew inflows of $1.58 billion and $1.34 billion, respectively. Additionally, inflation-linked bonds received $532 million, the largest inflow since July 2023.Money market funds acquired about $8.14 billion in inflows, marking the first weekly net purchase in four weeks.Among commodities, investors shed $401 million worth of precious metal funds, posting the third weekly outflow in four weeks. Energy funds saw a marginal $11 million worth of net buying. Data covering 29,511 emerging market funds showed a net outflow of $769 billion from bond funds during the week, the third straight week of withdrawal. Equity funds, however, received about $74 million in net purchases. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.South Korea has announced a crackdown on “shrinkflation”, saying producers of food and daily necessities must inform shoppers of any reduction to their product sizes or face fines.The Korea Fair Trade Commission said on Friday it was designating the practice of slimming down products while keeping their prices unchanged and not informing consumers as an “unfair transaction”.“This measure is to prevent a situation where reasonable consumers are forced to bear indirect price increases, as it is difficult to notice changes in product sizes or quantity if the prices and packages remain the same,” the KFTC said in a statement.The South Korean move comes amid international anger at the practice of shrinking products to pass on the cost of inflation to consumers. US President Joe Biden in March criticised companies for downsizing products, while French finance minister Bruno Le Maire has called shrinkflation a “scam” and announced that supermarkets would have to label products where volumes had been reduced.Under the new South Korea rule, if producers of processed foods including ham, cheese and noodles or household supplies such as toilet paper, toothpaste and detergents want to downsize products, they must put notices on packages or websites or at stores for the three months following the change.The new rule will take effect in August, with violators subject to a Won5m ($3,700) fine for a first offence and Won10m for a second.  High consumer prices have helped drive down the public approval ratings of South Korean President Yoon Suk Yeol, whose ruling party suffered a stinging defeat in parliamentary elections last month.In March, Yoon ordered “extraordinary measures” to bring consumer prices under control, including cuts to tariffs on food imports and spending Won150bn to subsidise food supplies.South Korea’s annual consumer price inflation eased for the first time in three months in April to 2.9 per cent from 3.1 per cent in March, but prices of fresh food were up 19.1 per cent from the same month of 2023. As the government has discouraged companies from raising prices to tame inflation, packages have shrunk.In November, the government set up a dedicated price-investigation team for daily price checks on staple items and in December listed examples of shrinkflation on the website of the state Korea Consumer Agency.Among the items featured were a bag of honey butter-flavoured almonds from HBAF reduced by 20 grammes, a sausage made by CJ CheilJedang whose weight was cut by 12.5 per cent and a packet of sliced cheese from Seoul Dairy that was slimmed down 10 per cent.Park Chong-hoon, head of research at Standard Chartered in Seoul, said authorities needed to bring inflation under control in order to cut interest rates to spur domestic consumption and boost the economy.“I am not sure how effective the new rule can be in fighting inflation, but it shows how desperate the government is,” Park said. More

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WASHINGTON (Reuters) – U.S. job growth slowed more than expected in April and annual wage gains cooled, but it is probably too early to expect that the Federal Reserve will start cutting interest rates before September as the labor market remains fairly tight. Nonfarm payrolls increased by 175,000 jobs last month, the Labor Department’s Bureau of Statistics said in its closely watched employment report on Friday. Data for March was revised up to show payrolls rising by 315,000 jobs instead of 303,000 as previously reported. Economists polled by Reuters had forecast payrolls advancing by 243,000. Estimates ranged from 150,000 to 280,000. The unemployment rate rose to 3.9% from 3.8%, still staying below 4% for the 27th straight month.Wages increased 3.9% in the 12 months through April after rising 4.1% in March. Wage growth in a 3.0%-3.5% range is seen as consistent with the Fed’s 2% inflation target.The U.S. central bank on Wednesday left its benchmark overnight interest rate unchanged in the current 5.25%-5.50% range, where it has been since July.Financial markets continue to expect the central bank to start its easing cycle in September. A minority of economists believe the window is closing. Since March 2022 the Fed has raised its policy rate by 525 basis points.Following news last week that economic growth slowed considerably in the first quarter, the moderation in payrolls could fan worries the economy was rapidly losing momentum in the second quarter. But the step-down in gross domestic product last quarter was largely because of a surge in imports, reflecting strong domestic demand. More