10 January 2025
If you are covering the latest US jobs data, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“In disappointing news for Chancellor Rachel Reeves, the bond market sell-off could continue following strong data out of the US today. The US labour market closed out 2024 on a good footing, with nonfarm payrolls up considerably more than expected at 256,000 in December and the unemployment level falling slightly to 4.1%.
“Today’s payrolls figure shows an even stronger increase than the revised 212,000 jobs added in November, which had already seen a surge compared to October when a combination of storms and strikes led to reduced payroll numbers.
“The Federal Reserve’s December interest rate cut could be the last we will see for some time. Recently, Fed officials have taken a considerably more cautious approach, and markets now anticipate a hold on rates until at least May. Donald Trump’s imminent inauguration and his potentially inflationary agenda of tariffs, immigration controls and personal and corporate tax cuts will likely see the Fed pause for thought at its next couple of meetings.
“Today’s figures show an incredibly resilient labour market, but there are still some concerns that we could see its current momentum derailed as we move further into the year. Trump’s first few months in office could not only prove inflationary, but there is also a risk that US jobs numbers could be negatively impacted should his pledges result in a lack of workers available to fill the vacancies on offer.
“The Fed will likely fall into ‘wait and see’ mode until at least the summer to ensure it has a better idea of how Trump’s policies are playing out.”
