Your Evening Briefing: SEC Said to Probe First Republic Trading

So the question now is, if the Fed is in pause mode when it comes to changing interest rates, how long will that pause last? If Friday’s data is any sign, it could be awhile, and certainly longer than hoped for by wishful thinkers on Wall Street who have been crossing their fingers for rate cuts. The unexpected rise in both US hiring and wages last month increase the chances the Federal Reserve will hold interest rates high for longer—and potentially keep the door open to an 11th straight hike in June. The unemployment rate even fell back to a half-century low of 3.4%. The numbers are of course good news for American workers, the Biden administration, and potentially Fed Chair Jerome Powell’s position that a soft landing is more likely than not. But Jonathan Levin, writing in Bloomberg Opinion, takes a different tack on the issue. Despite the new data, downward revisions to earlier numbers suggest a broad cooling trend remains intact. Some of the under-the-hood numbers corroborate a clear slowdown that’s well under way, he says. The numbers now show the US added an average of 182,000 private sector jobs in the past three months, the fewest since January 2021. More importantly, the average has returned to the pre-pandemic “normal.” Despite all the handwringing about a tight job market, Levin writes that the labor trends may be Powell’s best friend.

The US Securities and Exchange Commission is said to be investigating the conduct of First Republic executives before the regional bank’s seizure and sale to JPMorgan. The regulator is looking into whether any members of the then-executive team of First Republic improperly traded on inside information. In equities Friday, several other regional banks that are under pressure rallied along with the broader market.