US inflation rate holding at forty year highs


Friday saw the release of Non-Farm payroll data. The US economy added 490k jobs in March up from 678k jobs in February, and the unemployment rate fell from 3.8% to 3.7%. The US participation rate is expected to edge higher to 62.4%, while average hourly earnings are anticipated to come in at 5.5% year on year. A continued drop in covid cases likely served as a tailwind for US jobs growth in March, evidenced by US jobless claims dropping back to multi-decade lows in recent weeks.

What once seemed unthinkable is now a commonplace, inflation rate raging above 7% and holding at forty year highs. The Federal Reserve, at this point, appears to have no choice than to continue raising interest rates to combat the rising inflation. Money markets have been pricing in a minimum of three rate hikes for 2022.

With the amount of uncertainty surrounding the Russia-Ukraine war and Putin showing no signs of committing to any agreement, we will continue to see investors move assets into safe-haven currencies. The US dollar will strengthen until any deal breaking news is reported.