Notes from the Desk – US Payrolls – Holy Crap!
By the numbers.
Today’s US payrolls blew the doors off.
- The economy produced 517k jobs last month, more than double the 185k forecast.
- The unemployment rate fell to 3.4% vs. forecasts of a small rise to 3.6%.
- Although YoY wage growth of 4.4% was only 0.1% above consensus, this number will do little to comfort the Federal Reserve (Fed) that inflation is on a sustained downward path.
Implications.
The Fed has more work to do.
- Bond markets were anticipating one more 25 bps hike and are now moving in to price a reasonable probability of a second hike being delivered.
- We expect rates to move higher and test the top end of the recent trading range.
- Equities will likely trade lower as people ponder the likelihood that the Fed won’t cut rates later this year.
