• Notes from the Desk | US Payrolls - Wow!

Notes from the Desk | US Payrolls – Wow! Feb 02 2024

Notes From the Desk – US Payrolls – Wow!


Today’s US Non-farm Payroll report was unambiguously strong, reducing concerns that the US economy is on the precipice of a major slowdown.  With the data smashing expectations, Treasury yields are 8-18 bps higher.

The numbers.


  • 353k jobs gained (185k expected) and the last two months’ employment growth revised higher by 126k.
  • Unemployment rate remains at 3.7% (3.8% expected).
  • YoY payroll growth surprised to the upside at 4.5% (4.1% expected).




  • Going into the report, the bond market had priced a 35-40% probability of a March rate cut.  After today’s data, the odds are significantly lower.
  • While headlines will report that yield have surged higher so far this has just undone the rally of the past couple of days.  With hikes now out of the picture, the market is relegated to jockeying between the timing and pace of rate cuts.  Today’s move reflects expectations shifting from 6 to 5 this year.
  • More importantly, the resiliency of the economy despite higher interest rates suggests that the neutral rate is higher than the pre-Covid estimate of 2-3%.


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