© Reuters.
Investing.com – Traders on Friday tempered their expectations that a decline would begin in March after the monthly labor market report showed that employers added more workers in December than economists had expected.
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Futures contracts linked to the Fed’s interest rate indicated that traders see only a 50% chance of a rate cut in March, versus a roughly 65% chance ahead of the stronger-than-expected jobs data.
Traders have also trimmed their bets on how far the Fed will cut interest rates this year, and now expect the interest rate, currently in the 5.25%-5.5% range, to end the year just above 4%. They had earlier set the interest rate at the end of the year at less than 4%.
Meanwhile, financial markets cut their bets on interest rate cuts by the European Central Bank for 2024, priced at 140 basis points from 144 basis points before the US data.
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UK interest rate futures also point to around 117 basis points of rate cuts in 2024, down from 130 basis points on Thursday.
While short-term US interest rate futures traders reduced bets on Federal interest rate cuts after the jobs data.
The monthly employment report in the United States issued by the Bureau of Labor Statistics showed that the pace of employment in December rose more than expected, in addition to the stability of the unemployment rate and the rise in average hourly wages on an annual basis, all of which give the Fed the justification to maintain monetary policy tight for a longer period.
Data on Thursday showed that weekly unemployment claims fell more than expected last week and that private sector employers hired more workers than expected in December. The US private sector added 164,000 jobs in December compared to expectations of only 130,000, and unemployment claims fell to the lowest level in nearly 3 months, data that also indicates continued strength in the labor market.
For the month of December, while experts expected an addition of 170 thousand, the previous reading recorded 199 thousand but was revised downward to 173.
While 164 thousand jobs were added in December, expectations indicated an addition of 130 thousand, and the previous reading was revised downward to 136 thousand instead of 150 thousand.
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On the other hand, it recorded 3.7% in December, the same as the previous reading. While experts expected it to reach 3.8%.
It recorded 0.4% in December, the same as the previous reading, while expectations indicated an increase of only 0.3%.
2024-01-05 14:25:00
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