What happened last week?
The U.S. Labor Department released its much anticipated employment report on Friday.
The nonfarm payrolls were up a higher-than-expected 215,000 in March while unemployment also rose from 4.9 to 5 percent. The small increase in the unemployment rate was attributed to the equally small rise in labor participation rate, from 62.9 percent to 63.0 percent. The gain in participation possibly reflects new job seekers coming onto the market.
The report also suggested that there is pressure on average hourly earnings, at least on the monthly level with a higher-than-expected gain of 0.3 percent. However, this did not lift the year-on-year which came in at 2.3 percent.
March's strong employment numbers may complicate things for the Fed as the June FOMC meeting now seems like a rising possibility for the new rate hike, especially if another encouraging employment report comes before then.
On the other hand, inflation data were on the soft side with the core PCE up only 0.1 percent monthly and unchanged at 1.7 percent yearly. Overall prices were down 0.1 percent in March with the year-on-year rate at plus 1.0 percent.
- Yellen's messages and markets
Fed Chair Janet Yellen said on Tuesday the U.S. central bank should proceed cautiously with the tightening process due to rising risks in the global economic and financial outlook.
"The inflation outlook has also become somewhat more uncertain since the turn of the year, in part for reasons related to risks to the outlook for economic growth. To the extent that recent financial market turbulence signals an increased chance of a further slowing of growth abroad, oil prices could resume falling, and the dollar could start rising again. And if foreign developments were to adversely affect the U.S. economy by more than I expect, then the pace of labor market improvement would probably be slower, which would also tend to restrain growth in both wages and prices," she explained.
The markets cheered Yellen's 'dovish' messages and U.S. stocks posted their best March performance since 2009.
The week ahead
On April 7, Yellen will join a panel discussion with three former Fed chairs, Ben Bernanke, Alan Greenspan, and Paul Volcker at International House, a New York nonprofit.
This will be the first joint public speaking appearance by the four Fed leaders and will be watched closely.
Moreover, the FOMC minutes, which will be released on Wednesday April 6, will be evaluated by investors as they try to gauge how concerned Fed officials are about global challenges.