The strong April jobs report released Friday could change the view that the economy is facing an imminent recession and might lead to more institutional investor uncertainties in both the equity and bond markets, said Melissa R. Brown, global head of applied research at Qontigo, a Deutsche Boerse-owned financial analytics and index provider.
The U.S. economy added 253,000 jobs in April, far better than consensus expectations of 179,000, and well above March's downwardly revised figure of 165,000, the U.S. Bureau of Labor Statistics reported Friday.
"Strong job gains and low unemployment may signal that inflation is not over just yet," Ms. Brown said by email. "This is also on top of decent (first-quarter) earnings. That continued uncertainty could translate into more negative sentiment and higher volatility, especially as we won't hear from the Fed again for several weeks."
The next Federal Reserve meeting is June 13-14.
The unemployment rate clocked in at 3.4% in April, slightly below the 3.5% rate in March. The jobless rate has ranged between 3.4% and 3.7% since March 2022, the BLS said in the report.
Rhys Williams, chief strategist at Spouting Rock Asset Management, said that following release of the jobs report on Friday morning, the bond market is "selling off as it was pricing in a rate cut as early as this summer."
Mr. Williams also said he doesn't think anything in the jobs data can be considered "confirmatory that the economy is about to decline." He further noted that downward revisions to the March report "underscore that the jobs report should not be considered biblical truth, but more directional in nature, and one should look at several months together."
Spouting Rock has $2.3 billion in assets under management.
The Federal Reserve will likely closely examine the April jobs report as it prepares to release its next monetary policy decision June 14.
As of Friday morning, according to CME Group's FedWatch Tool, market participants' pricing of fed fund futures indicated there is an overwhelming 97.2% probability that the central bank will keep rates unchanged at the next meeting, and a scant 2.8% probability it will raise rates by another 25 basis points.
The Fed's key short-term interest rate is now in a range of 5% to 5.25%, after the central bank raised rates by 25 basis points on Wednesday.