03 May 2024
If you are covering the latest employment figures from the US, please find below a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“The employment situation in the US is showing increasing signs of moderation, with the latest figure falling short of expectations. However, one data point on its own will not cause any immediate reaction or change of strategy from the Federal Reserve, particularly given unemployment continues to hold steady. Indeed, as the Federal Reserve indicated earlier this week, it will laser in on getting inflation sustainably at or below the 2% target.
“While today’s miss will be good for markets given their hope for swifter interest rate cuts, it is very unlikely to move the needle at this stage when it comes to the Fed’s thinking about its first interest rate cut in this cycle. It ultimately appears as if the market got ahead of itself earlier this year in thinking the pace of interest rate cuts would be fairly swift initially. Instead, the higher for longer narrative is becoming more entrenched, and markets may have to rely on other catalysts until greater clarity on the Fed’s timeline is delivered, despite data prints such as this one.
“Clearly, the US economy has confounded expectations to date and the fact that the jobs market and economic growth have been robust of late with interest rates where they are is an impressive feat. Jerome Powell won’t necessarily be upset if the jobs market cools, as this ensures the soft landing continues without the need for further Fed intervention. Until figures such as these jobs numbers start to show serious warning signs, interest rates will remain elevated.”
