Strong Employment, but Trade Concerns Rise
Last week’s report on employment conditions showed strong continued gains in hiring, with 223,000 new jobs added during the past month. The unemployment rate fell to a new cyclical low of 3.8%, and average hourly earnings increased by 0.3% for the month and 2.7% year-over-year. The U.S. economy continues to perform well.
The pressure on markets from the troubles in Italy associated with its new populist government abated last week as the new government was able to pass an important hurdle; however, the potential impact on the European Union and euro currency has not changed. This is just one way populist movements around the globe will have implications for the coming years.
Trade tensions resumed last week as the Trump administration removed the waiver for the EU and Canada from the steel and aluminum tariffs ahead of this week’s G7 meeting. I expect the level of noise from trade-related fears to remain elevated in the near-term, but do not anticipate a meaningful impact on the markets given the strong fundamentals.
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