Reply To: Traders Market Weekly: Eyes on Powell and Adani Risks


The January Employment Situation Report showed much stronger than expected payroll growth, as well as upward revisions in November and December that were a combined 71,000 higher than previously reported. This report also included benchmark revisions to establishment survey data for March 2022, which resulted in the total nonfarm employment level for March 2022 being revised upward by 568,000 (or 506,000 on a not seasonally adjusted basis).

Beyond the payroll growth in January, which was widespread and included a gain of 128,000 for leisure and hospitality, a 105,000 increase in private education and health services, and a 25,900 increase in temporary jobs, the unemployment rate of 3.4% was the lowest since 1969. In turn, the average workweek jumped to 34.7 hours from 34.4 hours, which was a boon for aggregate wage growth.

Average hourly earnings were up 4.4% year-over-year versus 4.8% in December.

The key takeaway from the report is that it has the market questioning its own conviction about the prospect of the Fed cutting rates before the end of the year, as it is thought the remarkable strength of the report could have the Fed questioning its own conviction about pausing rates soon.

Treasury yields took a sharp turn higher following the release of the jobs report. The 2-yr note yield, at 4.10% shortly before the jobs report, sits at 4.24% now. The 10-yr note yield, at 3.39% shortly before the release, sits at 3.50% now.