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Market Outlook

December 2023 Payroll Report: Job Gains Exceed Expectations Amid Rising Wages

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Category – Market Outlook

Payroll Report for Dec 2023

Net job gains 216K, higher than the 175K expected.

Hourly wage gains 4.1%, higher than 3.9% expected.

The two-month payroll revision, though, shows a 71,000 reduction in gains.

The 10-year treasury is up 8 basis points to 4.07%, with hourly wage gain increase being the main culprit.

S&P Futures down 0.4%

Expectations of the Fed reducing rates at their March meeting are down to only 50% based on a good jobs report and the higher wage increase.

Categories
Market Outlook

January Inflation Surprises: Rates Climb Above 3%

Inflation rose more than expected in January, still hanging over 3%

  • MoM January Consumer Price Index: +0.3% vs. +0.2% expected and +0.2% in December (revised from +0.3%).
  • YoY +3.1% Y/Y vs. +3.0% expected and +3.4% prior.
  • Core CPI, which excludes food and energy: 
  • MoM+0.4% vs. +0.3% expected and +0.3% prior.
  • YoY +3.9% Y/Y vs. +3.7% expected and +3.9% prior.

The biggest factors:

The shelter index increased 0.6% in Jan. after rising 0.4% in Dec.

Health insurance climbed 1.4% on the month, the most since September 2022. Vehicle insurance rose the same amount, and that’s on top of a long string of outsize gains. The year-on-year increase in car insurance continues to be the biggest since 1976.

Treasury yields soared across the curve. Both two-year and 10-year yields jumped about 15 bps.

The market sees no chance for a rate hike in March. The odds for an increase in May are about 1/3. A hike in June is fully priced in, though.