Morning Minutes

Disappointing US Nonfarm Payrolls Drag Down US Yields and the US Dollar




US index futures have shown resilience in the face of disappointing North American employment reports. Dow futures fell initially but have clawed their way back to flat, while NASDAQ futures jumped on the news and are currently up about 1.2%.

The 10-year US treasury note yield has gone into a nosedive on the employment numbers which suggest a slower than previously thought recovery, dropping toward 1.50%.  This index divergence also suggests that investors may be reconsidering the relative prospects of value plays and companies sensitive to the broader economy reopening (to which the Dow and S&P have been more sensitive lately), relative to growth/momentum plays and stocks which have benefitted form the stay-at-home economy (which the NASDAQ has been more sensitive to over the last year).

US nonfarm payrolls came in well below expectations (266K vs street 978K, previous revised down to 770K from 916K). The US unemployment rate was also worse than expected (6.1% vs street 5.8% vs previous 6.0%)

Canadian employment was worse than expected due to the impact of the latest round of lockdowns, both in terms of job losses (-207K vs street -175K and previous 303K), and the unemployment rate (8.1% vs street 7.8% and previous 7.5%).

Overnight, China announced a $42.8B trade surplus, well above the $28.1B the street had expected, and a big acceleration from the previous month’s surplus of $13.8B. Exports rose 22.2% which were up from the previous month’s 20.7% growth rate, but short of the 30.7% growth the street had expected.

The US Dollar has gone into retreat this morning with treasury yields falling, igniting a 1.3% gold rally. Copper is up 2.2% while WTI crude oil is down 0.4%. The Euro and Pound are both up 0.5% on the US Dollar today, while the Canadian Dollar is up another 0.2%.

Later this morning, the Canadian Ivey PMI report is due at 10:00 am EDT (60.5 vs previous 72.9). US President Biden is speaking at 11:00 am where he expected to speak on his infrastructure and job creation plans.

A number of earnings reports have come out between last night and this morning particularly from Canadian companies. Benefitting from soaring lumber prices and the acquisition of Norbord, West Fraser Timber* announced Q1 sales of $2.34B, up 81% from the previous quarter.   On the other hand, Air Canada continues to struggle with the impact of travel restrictions and lockdowns, having posted a $1.3B loss in Q1 as capacity fell 82% from a year ago and revenues fell 80% to $729M.

US overnight corporate news have been mixed. Earnings reports were headlined by Square ($0.41 vs street $0.16), Roku ($0.54 vs street -$0.13), and Beyond Meat (-$0.42 vs street -$0.19). Peloton announced a $165M writedown related to its recent treadmill recall. Pfizer and BioNTech announced that they are seeking full regulatory approval (they currently have emergency approval) for their COVID vaccine which would allow them to market their product directly to consumers.  

*Shares of West Fraser Timber are held in portfolios managed by SIA Wealth Management.

Subscribe to the Morning Minutes:

Today's earnings reports and market activity, delivered right to your inbox.

Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

Read More

Legal and Regulatory Disclosures

Terms and Conditions:
This information is for Investment Advisors only. The website is for informational purposes only and is not intended to provide a complete description of SIA Wealth Management’s products or services. Past performance is not indicative of future results. It should not be construed as investment advice or relied upon in making an investment decision. Products and services of SIA Wealth Management are only offered in jurisdictions where they may be lawfully offered for sale. The information contained in this Website does not constitute an offer or solicitation by anyone to buy or sell any investment fund or other product, service or information to anyone in any jurisdiction in which an offer or solicitation is not authorized or cannot be legally made or to any person to whom it is unlawful to make an offer of solicitation. All products and services are subject to the terms of each and every applicable agreement. It is important to note that not all products, services and information are available in all jurisdictions outside Canada.

SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, Advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIA Wealth Management Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.