US NFP report 'all but guarantees' Fed rate cut pause until at least June
The dollar has received another big leg up today after a stellar nonfarm payrolls report pointed to no end in sight to the recent period of US economic exceptionalism.
Jobs continue to be added at an extraordinarily impressive pace, with the December NFP print obliterating even the most optimistic of forecasts. The unemployment rate has dropped, and nominal earnings growth remains elevated, despite coming in slightly below estimates.
We think that today’s report all but guarantees that the Federal Reserve won’t even consider lowering interest rates again until at least June, and it is far from inconceivable that we see no US rate cuts at all during the entirety of 2025.
Bond markets globally have continued to sell-off on the news, in what is beginning to constitute a significant worry for borrowers, while also raising the risk of a slowdown in global economic activity this year.
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