In April, U.S. job growth fell short of expectations with only 175,000 jobs added, compared to the forecasted 240,000, while the unemployment rate rose to 3.9%, marking a deviation from the recent trend of robust employment gains. This shift could influence the Federal Reserve’s strategy on interest rate adjustments. Additionally, average hourly earnings increased by only 0.2% month-over-month and 3.9% year-over-year, figures that were also below expectations, suggesting subdued inflationary pressures. The broader labor market indicators, such as the more comprehensive unemployment rate and labor force participation, also reflected some softening, with the former reaching its highest level since November 2021 at 7.4%.

Alvin Tan, head of Asia FX strategy at RBC Capital Markets and the top currency forecaster, predicts the yen could weaken to 165 per dollar, a level last seen in 1986. Despite Japan's potential interventions to support its currency, the significant interest rate gap between Japan and the U.S. continues to drive the yen's decline. Tan suggests that effective intervention would require coordination with the U.S., as the currency is expected to breach the 160 level and possibly reach 165 amid sustained bearish sentiment.

The Brookings Institute explores the complexities of measuring real pay, which adjusts nominal earnings for inflation. Given the variety of pay and inflation metrics used, determining trends in real pay can yield differing results. Our interactive tool allows users to select any starting quarter and compare annualized changes in real pay to the most recent data, using four different pay measures and two inflation indices. By interacting with the data, users can see how real pay has shifted over selected periods, helping clarify the relationship between wages and the cost of living.

With inflation remaining high and interest rates elevated, reviewing your investment portfolio this May is more crucial than ever. Gold, which reached its highest investment level in over a decade last year and has been breaking price records recently, presents a unique opportunity. Unlike traditional assets like stocks and bonds, gold operates differently and offers distinct benefits. Considering the current economic conditions, there are several compelling reasons to consider adding gold to your portfolio this month.