With the publication of the US employment report in January, one really wonders whether, rather than the central banks, it is the markets that risk making a big blunder.
Indeed, the no-farm payrolls report found that the US economy created 517,000 new jobs last month, well above the consensus-expected growth of 185,000 new payrolls, and at a much stronger pace than even 223,000 new jobs created in December.
Not only. The unemployment rate fell from 3.5% in December to 3.4%, compared with a rise to 3.6% expected.
Keep an eye on the wages component, carefully monitored as it is a crucial parameter that measures the inflation trend.
Average hourly wages rose 0.3% month-on-month in January, as expected.
On an annual basis, however, growth was 4.4%, versus the +4.3% expected. However, there was a slowdown compared to +4.6% in December.
The US employment report also found that the US labor force participation rate rose from 62.3% in December to 62.4%.
The average weekly hours worked amounted to 34.7, more than the 34.3 hours expected and against 34.3 hours in December.
The day before yesterday, Wednesday 1 February, the Fomc, the monetary policy arm of the Fed led by Jerome Powell, announced that it had raised US interest rates by 25 basis points, to a new range of between 4.5% and 4.75%, a record since October 2007.
The hike announced was the eighth since the US central bank began raising rates in March 2022.
Although the Fed helmsman has repeatedly tried to reiterate his firm intention to continue the fight against inflation, some have spoken of a dovish turn, referring both to his strange response and to other statements and admissions.
It was the central banker himself who acknowledged that “we can now say, I believe for the first time, that the disinflationary process has begun”.
However, Powell also spoke of the need for further monetary tightening, while admitting that the terminal rate could remain below the 5% threshold.
Did the solidity of the US labor market confirmed by the US employment report released today surprise even the Federal Reserve?
US stock index futures accelerate downwards, with those on the Nasdaq dropping 1.74% and those on the Dow Jones losing more than 200 points. Rates on 10-year US Treasuries rise to 3.49%; those of two-year Treasuries jumped to 4.22%.