Instant View: Job gains largest in 11 months

KEY POINTS:

* Nonfarm payrolls rose 244,000 last month, the most in 11 months, the Labor Department said. * The private sector accounted for all of the job gains last month, with payrolls rising 268,000, the largest rise since February 2006. * The gain in overall payrolls, above economist' expectations for a 186,000 increase, was supportive of views the economic recovery would regain speed this quarter after stumbling in the first three months of the year on high commodity prices. * Data for the previous two months was revised to show 46,000 more jobs were added.

COMMENTS:

JOHN KILDUFF, PARTNER AT AGAIN CAPITAL LLC IN NEW YORK

"This is the first positive data point in several days. To the extent it gives further lift to the dollar, commodities will continue to come under pressure.

"The speculative excesses will continue to be rung out even though an uptick in employment is usually supportive for energy and gasoline, in particular."

MICHAEL CHEAH, SENIOR PORTFOLIO MANAGER, SUNAMERICA ASSET MANAGEMENT, JERSEY CITY, NEW JERSEY

"I think this makes it easier for Bernanke not to think about QE3. There are people who were expecting continuing quantitative easing.

"I expect the bond market to sell off, but I don't think the sell-off will be drastic because the rally in the past few weeks has been done on short covering. Not a lot of people were long in the market to liquidate ... the bond market was the most hated asset class for a while."

"Pricing in a rate increase is premature because we are still in QE2 mode. The Federal Reserve is not like a jet-ski ... it doesn't (quickly) move from accommodative to tightening. Historically and politically, the Fed doesn't raise rates until unemployment rate gets to an acceptable level."

On the commodity selling: "I think certainly there are dislocations and there are huge winners and losers. The question will be are the losers be forced to sell other things to make margin requirements? If anything, the winners will sell to make more money."

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK + CO, NEW YORK

"In terms of the Fed's response to a continued improvement in the labor market, the only thing they are watching right now is how markets (and the) economy respond to the end of QE2 and they'll then take it from there."

RICHARD GILHOOLY, INTEREST RATE STRATEGIST, TD SECURITIES, NEW YORK

"The Treasury market was looking for a weak number after everything this week. This week was more about position adjustment than it was about economics. The economics are still fine. It was better than expected. The unemployment rate was higher, which is a little bit of weakness, but we expected that because we thought people would come into the labor market. This is a strong number. We think you'll see a more significant sell-off (in Treasuries) into next week's supply."

TODD SCHOENBERGER, MANAGING DIRECTOR, LANDCOLT TRADING LLC, LEWES, DELAWARE

"The jobs report is further evidence that QE2 is, indeed, working. Despite the recent poor readings on the labor front (ADP, jobless claims), payrolls are growing. And, it's obvious these jobs are sticky, and not of the temporary, part-time variety. Equities should rally on the news, especially following yesterday's dramatic sell-off."

SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK

"I'm quite surprised by this one, it was much stronger than we had been looking for or the market was looking for. We saw pretty weak employment indicators over the last week, whether it was ADP, claims or ISM, so this kind of runs against that. The question is whether or not this pace will be sustained, which is probably not likely and it is probably stronger than we would see in a more moderate recovery."

"I'm looking at household survey employment and that fell 190,000 so that is probably more consistent with everything else we've seen. Retail was very strong, but that might be a seasonal adjustment issue. I don't think we are going to keep building momentum like this, we'll probably settle around the 175,000 to 200,000 area before we really take off. These hikes in energy and some uncertainty in the outlook should restrain the upside for a bit."

MICHAEL SHAOUL, CHAIRMAN OF MARKETFIELD ASSET MANAGEMENT, WHICH OVERSEES $973 MILLION FROM NEW YORK

"It's a pretty good number, but we've always made the point that this is volatile. To us it looks like a good recovery taking place in payrolls, and it goes against the worries that came about with the jobless claims yesterday. We think employment is recovering strongly and will continue to do so throughout 2011."

GARY THAYER, CHIEF MACRO STRATEGIST, WELLS FARGO ADVISORS, ST. LOUIS, MISSOURI

"It looks like a good report if you don't look at unemployment. Job creation is good. We're getting close to the point where we are seeing sustainable job growth. That creates income that generates spending and, hopefully, more jobs. We still have a lot of people unemployed. That holds things back. The stock market likes the numbers, but the report also moves us maybe a step closer to the Fed pulling back on stimulus. That doesn't mean a rate hike right away. We might see the Fed let its balance sheet contract a bit in the second half of the year, but we probably won't see an actual rate hike until early 2012."

DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS

"In looking at the reason for the surprise a 57k increase in retail stands out, and there must be suspicions that a late Easter inflated this figure. Still, with auto and chain store data having been healthy in April the rise may not be fully distorted, and even if it were the payroll excluding retail implies a respectable pace of growth persists. There was a disappointment in a rise in unemployment to 9.0 percent from 8.8 percent, a correction from recent declines that appeared to outperform the economy, but a 0.1 percent rise in average hourly earnings, 0.3 percent net of revisions, means that the unemployment rate is the only notable weak spot of a generally positive report."

MARKET REACTION:

STOCKS: U.S. stock index futures extend gains.

BONDS: U.S. bond prices extend losses.

FOREX: The dollar extends gains versus euro and yen.