The rumours of a soft payroll report appear to have been ‘fake news’, or, as per Winston Churchill, ‘terminological inexactitudes’. The 130k was twice the consensus estimate, reinforcing Powell’s view that the labour market is stabilizing.
The numbers.
- 130k jobs created (65k expected)
- Unemployment rate: 4.3% (down one tick)
- Participation rate: 62.5% (up one tick)
- Wages: +0.4% m/m | 3.7% y/y
The implications.
- The initial reaction has Treasury yields 2-7 bps higher.
- The data supports the Fed’s patience. With job growth holding up, unemployment edging lower, and wage growth steady, there’s little urgency to move.
- Cuts haven’t disappeared from the radar. June now looks more plausible than March for a first move, with two cuts still a reasonable base case for the year.
