US jobs surprise reduces chance of a rate cut in March

US jobs surprise reduces chance of a rate cut in March

US large-cap stocks were higher last week (small-caps were lower and still lag). Europe and Asia were mixed.

In the US The Fed kept interest rates on hold for the fourth month running with Chair Powell commenting that while it would be appropriate to lower rates at some point this year, it is unlikely that a cut will happen as soon as March. Markets are now pricing in less than a 20% chance of a March cut. The Fed wants to be more confident that inflation is heading lower and Friday’s job report probably didn’t help with that – the US economy added 353,000 thousand payrolls in January, the largest monthly gain in more than a year and much higher than expected. The US 10-year Treasury yield rose back above 4% following the report and the Dollar surged. Globally, government bond yields are higher today (Monday).

The Bank of England also left rates unchanged at 5.25% with comments from the bank’s Governor Andrew Bailey “we need to see more evidence that inflation is set to fall all the way to the 2% target, and stay there, before we can lower interest rates.”

US Risk Barometer 2nd February 2024

Europe Risk Barometer 2nd February 2024

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