We expect nonfarm payrolls (NFP) growth rebounded to 45k in March. The unemployment rate is likely to remain steady, just rounding down to 4.4%. We expect average hourly earnings growth of 0.3% m-o-m after two months of 0.4% increases. Underlying wage growth appears to have stabilized around 4%. March NFP growth will likely be boosted around 30k by the end of a nurse’s strike. This was a drag on February NFP, but concluded shortly after last month’s reference week, so a full reversal is likely in this report. Initial and continuing jobless claims both improved through the March NFP survey reference week. We expect headline job gains to stabilize in March after two exceptionally noisy reports. Rate cuts remain likely later this year under new Fed leadership, but, for now, we expect officials to remain patient. We now see only one rate cut of 25 bps in Q4CY26 in US. Markets have completely removed cuts from REMCY26 and are now pricing in a 24% probability of a 25-bps rate hike in REMCY26. We believe it is a trading opportunity and recommended putting on 2*10 US SOFR steepeners around 25 levels last to last week. Although we did see our stop loss 15 levels intermittently last week, now the trade has recovered to 22 levels, and we continue to target 40 levels. We also like receiving the 1yr-1yr SOFR around 3.75 levels (CMP 3.66) for an eventual profit target of 3.5 with stop at 3.90. Even if there is no cut till Powell remains as Fed chair but as Warsh comes in and settles, rate cuts might still happen in a backend manner i.e. Sep’26/Dec’26 or Dec’26/Mar’26. 2/3rd of 2026 voters still expect to ease this year.
