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Author Michael Oravetz

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A hawkish jobs report is fueling another sell-off in risk assets to open Friday trading.

U.S. non-farm payrolls increased 216,000 in the December reading, besting median estimates of 175,000. Wages also came in higher than expected both month-over-month (+0.4%) and year-over-year (+4.1%). The unemployment rate held steady at 3.7% as labor force participation shrank, the latter experiencing the largest monthly decline in almost 3 years. Contracts on S&P 500 futures are down roughly 0.20%, and Treasury yields are 5-6 basis points (bps) higher across the curve.

Taken in concert with the Federal Reserve’s rhetoric, another strong jobs report suggests policymakers won’t be inclined to cut rates imminently. Traders responded in kind, pulling back the probability of a first reduction in the Federal Funds rate to roughly 50% in March. In addition, the total amount of rate cuts priced into 2024 has been slashed to approximately 130 bps, down from 150 bps earlier this week. In other words, nearly a full 25 bps cut has been priced out of the futures market.

Michael Oravetz
Senior Director, Investment Management Group

DateEventSurveyActualPriorRevised
1/5/2024Revisions: Household Survey Data
1/5/2024Two-Month Payroll Net Revision—-71k——
1/5/2024Change in Nonfarm Payrolls175k216k199k173k
1/5/2024Change in Private Payrolls130k164k150k136k
1/5/2024Change in Manufact. Payrolls5k6k28k26k
1/5/2024Unemployment Rate3.80%3.70%3.70%—
1/5/2024Average Hourly Earnings MoM0.30%0.40%0.40%—
1/5/2024Average Hourly Earnings YoY3.90%4.10%4.00%—
1/5/2024Average Weekly Hours All Employees34.434.334.4—
1/5/2024Labor Force Participation Rate62.80%62.50%62.80%—
1/5/2024Underemployment Rate—7.10%7.00%—
1/5/2024Factory Orders2.40%—-3.60%—
1/5/2024Factory Orders Ex Trans-0.10%—-1.20%—
1/5/2024Durable Goods Orders5.40%—5.40%—
1/5/2024Durables Ex Transportation0.50%—0.50%—
1/5/2024Cap Goods Orders Nondef Ex Air——0.80%—
1/5/2024Cap Goods Ship Nondef Ex Air——-0.10%—
1/5/2024ISM Services Index52.5—52.7—
1/5/2024ISM Services Prices Paid57.3—58.3—
1/5/2024ISM Services Employment51—50.7—
1/5/2024ISM Services New Orders56.1—55.5—
Michael Oravetz

Michael Oravetz

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