Last Friday, the United States released its March non-farm payroll report, showing an addition of 178,000 jobs, significantly exceeding market expectations. From a sectoral perspective, the normalization of temperatures in March, following February's extreme cold weather, provided a notable boost to weather-sensitive industries such as construction (+26k) and leisure and hospitality (+44k). The end of the nurses' strike contributed to job growth in the education and health services sector (+91k). Both the unemployment rate and labor force participation rate saw slight declines, while wage growth remained moderate. Despite disruptions from temporary factors like weather and strikes, the overall job market recently demonstrated considerable resilience.
Last week, the situation in the Middle East continued to exhibit high uncertainty. In a national address, former President Trump issued an escalation threat, warning that the U.S. would strike Iran with extreme force within the next two to three weeks. He stated that if Iran refused to reach an agreement, the U.S. would launch comprehensive strikes against its electrical infrastructure. Iran responded with a firm stance. Against this backdrop, central banks globally face more difficult choices between supporting growth and combating inflation, generally leaning towards caution or maintaining a hawkish posture. Regarding asset allocation, market risk appetite has moderated amidst the uncertainty, with defensive sectors like utilities gaining favor. The conflict has highlighted the value of energy security, creating a positive outlook for renewable energy and energy storage sectors.
The Middle East situation remained highly uncertain last week. On April 1st local time, former President Trump, in a national address concerning Iran, issued an escalation threat, warning that the U.S. would strike Iran with extreme force within the next two to three weeks. He added that if Iran refused to reach an agreement, the U.S. would launch comprehensive strikes against its electrical infrastructure. On the evening of April 4th local time, Trump further stated on Truth Social: "Remember I gave Iran ten days to make a deal, or to open the Strait of Hormuz. Time is running out—in 48 hours, they will face hellish consequences." Iran responded by stating that "if the situation escalates, the entire Middle East will be hell for the U.S. and Israel." While confrontation intensified, multiple parties attempted to increase mediation efforts. UK Prime Minister Keir Starmer stated he would convene 35 countries to discuss how to reopen the Strait of Hormuz. Furthermore, Citrini Research, through on-the-ground investigation, found that despite ongoing military conflict between the U.S. and Iran, other countries are actively negotiating with Iran to ensure their vessels can pass through the Strait. The market is re-evaluating the actual transit situation in the Strait of Hormuz, gradually moving beyond the previous binary narrative of either blockade or openness.
Regarding economic data, the U.S. released its March non-farm payroll report, showing an addition of 178,000 jobs, significantly exceeding market expectations. From a sectoral perspective, the normalization of temperatures in March, following February's extreme cold weather, provided a notable boost to weather-sensitive industries such as construction (+26k) and leisure and hospitality (+44k). The end of the nurses' strike contributed to job growth in the education and health services sector (+91k). The unemployment rate fell by 0.1 percentage points to 4.3%, the labor force participation rate declined to 61.9%, and wage growth remained moderate. Despite disruptions from temporary factors like weather, the overall job market recently demonstrated considerable resilience. The relative stability in U.S. initial jobless claims and continuing claims further corroborates this point.
Tracking Federal Reserve views: 1. Fed Chair Powell: In a discussion at Harvard University last Tuesday, Powell stated that "the Fed will adopt a wait-and-see attitude regarding the economic impact of the Iran war." He subsequently expressed concern about the U.S. balance sheet: "The real trouble isn't our $39 trillion in liabilities, but Congress's current fiscally unsustainable path of spending beyond its means." When asked about the Fed's view on employment issues, Powell said, "Young people today are indeed facing a more difficult job market," but based on U.S. economic vitality and growth since WWII, he encouraged young people to remain optimistic about the medium-to-long-term outlook and to actively embrace and utilize AI. 2. Fed Governor Barr: In a speech at the Brookings Institution, Barr expressed views similar to Powell's. He stated: "Given the uncertainty the current Middle East turmoil introduces into our economy, adopting a wait-and-see attitude is prudent. Our current policy stance allows us to hold rates steady while assessing incoming data, the evolving economic outlook, and the balance of risks." 3. Fed Governor Milan: Milan believes the "wage-price spiral" narrative lacks evidence and that oil prices have not impacted inflation expectations; although markets have been volatile during the Iran war, this signal should not be overinterpreted. Regarding the balance sheet issue, he believes the response to tight financial conditions should involve rate cuts combined with balance sheet reduction. On employment, Milan sees concerning aspects in the job market that need to be addressed through gradual rate cuts. Simultaneously, he supports the job-creating potential of artificial intelligence. 4. New York Fed President Williams: In a speech on March 31st, Williams stated that the path of inflation carries high uncertainty, and low employment growth could accelerate economic pessimism. He believes AI has the potential to create jobs. In an April 3rd speech, he noted that the impact of rising energy prices on inflation could affect economic stability. 5. Dallas Fed President Logan: In an April 2nd speech, Logan expressed the view that the labor market had stabilized by the second half of 2025 and that the Fed was prepared to respond to war and energy price changes. Simultaneously, she emphasized monitoring inflation pressures, particularly core services inflation, and reaffirmed the commitment to the 2% inflation target. She believes private credit risks are under control, and while AI has not yet significantly boosted productivity, it holds future potential.
Risk Warning: The evolution of the Middle East situation is highly uncertain and may exacerbate market volatility.
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