Labor Market | Weekly Excerpt March 13

We mentioned in the previous excerpt that we had to be on the lookout for reports on the unemployment rate. On Tuesday, Powell's appearance was held, where he confirmed what was already being inferred based on the new economic data. The Fed plans to extend its hiking period until possibly after mid-year regardless of the effects on unemployment.

The Fed has changed its stance

Following Fed Chairman Jerome Powell's hawkish comments earlier this week, markets had been paying close attention to the statistics because any slowdown in the labor market would lead the Fed to change its stance on monetary policy. Traders now predict a 28% probability that the Fed will raise interest rates by 50 basis points this month, down from a 50% probability prior to the data release.

All three major U.S. indexes were heading for weekly losses as Fed Chairman Jerome Powell left open the possibility of a large rate hike at the Fed's March meeting after the central bank reduced the size of its rate hike last month.

Rate hike calms nerves

U.S. stock indexes fell Friday as banking stocks continued to decline following Silicon Valley Bank's attempts to raise capital, adding to concerns about the health of the sector. But signs of a cooling in the labor market helped calm some rate hike jitters.

Trading in SVB shares was suspended Friday after they fell more than 40% before the bell, indicating that the company's efforts to acquire capital have been unsuccessful. State regulators then proceeded to close the bank in one of the largest declines for a U.S. financial institution since 2008.