U.S. Nonfarm Payrolls Rebound Exceeds Expectations, Rate Cuts May Be Delayed; Fertilizer Disruptions and Energy Costs Push Up Agricultural Products, Partial Central Bank Gold Sales Do Not Affect Long-Term Uptrend—0407 Macro Brief

In March, U.S. nonfarm payrolls increased by 178,000, exceeding expectations, with the largest gains seen in the education and healthcare sectors as a result of strikes ending. The unemployment rate fell by 0.1 percentage points to 4.3%. In the short term, the Federal Reserve remains focused on monitoring inflation risks, and the timing for rate cuts may be delayed.

Due to disruptions in fertilizer supply and rising energy costs, agricultural product prices are facing upward pressure. Although safe-haven funds pushed the U.S. dollar to strengthen in the short term at the onset of the conflict, expectations for tightening by the European Central Bank have surpassed those of the Federal Reserve amid rising stagflation risks, widening the interest rate differential between Europe and the U.S. and leading to a medium- to long-term weakening of the dollar.

Since the U.S.-Iran conflict, some central banks have been selling gold. Central banks exhibit trend-following behavior and may also be compelled to sell gold to meet liquidity needs or increase foreign reserves. However, the long-term upward trend of gold remains intact; in March, global central banks made a net purchase of 14.7 tons, and the long-term weakening pattern of dollar credit has not changed.