Daily commentary & market insights, May 2, 2025

Market Update – U.S. Jobs Report & Global Developments

U.S. Labor Market – April 2025

Wage Growth: Average hourly earnings rose 0.2% month-over-month, below expectations of 0.3%.
Job Creation: The U.S. economy added 177,000 nonfarm payroll jobs in April, beating expectations of 135,000. While slightly slower than March’s revised 185,000 gain, it outpaces the three-month average.
Unemployment: The jobless rate held steady at 4.2% for the third consecutive month, remaining within a narrow 4.0%–4.2% range since May 2024. This remains a historically low level.
Sector Trends: Employment gains were led by health care, transportation and warehousing, financial activities, and social assistance. Conversely, federal government jobs declined by 9,000 in April, bringing the total drop since January to 26,000.

Policy & Political Developments

Trump Reacts: Former President Trump renewed calls for the Fed to cut rates, citing strong employment and dismissing inflation concerns. However, the Fed’s preferred inflation measure — the PCE index — rose 2.3% year-over-year in March, above the 2% target.
Fed’s Dilemma: The central bank faces a unique challenge — whether to cut rates as inflation remains above its 2% target, or raise them to counter the potential inflationary impact of Trump’s proposed tariffs and ongoing policy uncertainty.
Fiscal Outlook: Trump’s proposed FY2026 budget released this morning and includes $163 billion in cuts to domestic programs and a 13% increase in military spending, bringing the defense budget to $1.01 trillion.

Canada

Post-Election Priorities: Newly elected Canadian PM Carney faces multiple economic headwinds including a trade dispute with the U.S., weak productivity, and cool business investment. He reaffirmed plans to reduce U.S. dependency and cut interprovincial trade barriers by July 1.
Energy Prices: Canadian gas prices are down over 19% year-over-year, reflecting the steepest monthly oil price decline since April 2021.

Current Market Conditions:

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