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Earlier this week the @federalreserve raised #policy rates at an extraordinary 75 basis point increment (its fourth time doing so this year), in an attempt to moderate excessively high levels of #inflation.
Still, if the central bankers were hoping to see signs of slowing in the persistently solid #LaborMarkets, as an indicator that policies were slowing growth and in turn #inflation, they may be somewhat disheartened by today’s data.
Indeed, nonfarm #payrolls increased by 261k jobs in Oct, with private employment rising an average of 262k/month over the past three months, which does not yet imply that the slowing that policymakers believe we’ll need to see to tame #inflation has arrived.
The @federalreserve’s #FOMC has now moved in 75 basis point increments four times this year to get to a sought-after #policy destination very quickly.
Yet, the destination seems to have moved further away with each subsequent elevated #inflation print, and with #employment in the country remaining very tight.
Hence, while moving the #FederalFunds rate at a very fast 75 bps increment seemed almost inconceivable several months ago, especially as the #Fed was still undertaking quantitative easing (#QE) in March, we have become used to this extraordinary increment.
Citibank 1/5: Data releases Friday:
#USD: Nonfarm #payrolls - fewer new jobs leave markets pricing a bigger fiscal expansion – US economy adds just 49K jobs in Jan, sharply weaker than consensus for 105K. But hiring as measured in the household survey shows employment up by 201K,
#USD: Nonfarm #payrolls - fewer new jobs leave markets pricing a bigger fiscal expansion – US economy adds just 49K jobs in Jan, sharply weaker than consensus for 105K. But hiring as measured in the household survey shows employment up by 201K,
Citibank 2/5: leading the unemployment rate to decline from 6.7% to 6.3%. Average hourly earnings rise 0.2%MoM. Market react to the weaker jobs report (higher US yields and weaker USD) by pricing an increased probability of a larger US fiscal package.
Citibank 3/5: Citi analysts now expect a ~$1.5trln package in March & raising US nominal GDP by 0.7pp with about 2/3 of that showing up as real growth & 1/3 in faster inflation. Citi analysts expect 5.4%YoY real US GDP growth in 2021 and 2.1-2.2%YoY core PCE inflation at year-end
Daily Bookmarks to GAVNet 01/06/2021 greeneracresvaluenetwork.wordpress.com/2021/01/06/dai…
The March #JobsReport released this morning largely reflects lagged conditions, as there’s a mismatch between the timing of #coronavirus-related developments later in the month of March, and the timing of the @BLS_gov’s establishment survey earlier in the month.
And the decline in nonfarm #payrolls, of -701,000 jobs, while a sharp reversal from strong Jan/Feb #employment figures, is going to get much worse in the months to come, as the #BLS’s surveys catch up with the reality of significant #economic shutdowns across most states.
Therefore, #employment data such as today’s report, and initial and continuing claims for #unemployment, will grow in importance from here as a broad barometer of #economic health and for understanding the transition of the #economy through this crisis.
At the end of last year, we highlighted our theme that 2020 would likely hew to around a 1.8%ish year (on real #GDP, Core #PCE, the 10-Year UST and the #Fed Funds Rate), but there are some other areas in which variations on this numeric guidepost also seem relevant too.
For instance, we’ve been impressed that the 3-month moving average on #payrolls resides now at 184,000, although it may well decelerate somewhat from that pace as the year goes on.
Further, roughly 1.8 million people will be hitting their formal #retirement age (65 years) every six months in 2020, which is nearly double the pace from just 20 years ago! 
Today’s #payrolls figures were quite good overall, but various policy and global macro uncertainties are clouding its meaning for #investors.
As my colleague Bob Miller recently pointed out, while the #Fed’s policy rate hike pause has received all the attention of late, the #FOMC Minutes released this week make it clear that the balance sheet discussion will be the next big thing for markets to focus on.
In the wake of solid nonfarm #payrolls, decent manufacturing ISM, and strong Core CPI; have markets gone too far in assuming no rate hikes in 2019, and likely cuts in 2020? We think perhaps so, as the #Fed may yet take an opportunity to hike this year if data allows.
At 250,000 #jobs gained, #payrolls were quite solid today, and it’s clear that our economy requires more and more people to meet the overall demand for goods and services, and it is still cost-efficient to make those hires.
Perhaps even more remarkably, average-hourly-earnings accelerated to a year-on-year gain of 3.1%, which is impressive in terms of what it’s telling us about today’s #economy, and where we are going in terms of marginally, but tangibly, higher #wages.
Still, despite the improved gains in wages, we do not believe that feeds through to meaningfully higher #inflation, as some commentators have suggested, as secular trends, such as #technology and demographics, should hold price increases in check.
