Jobs Data Shows Labor Tightening While Yield Curve Signals Fed May Be Near the End of Cuts
Market Narrative
The S&P 500 is trading modestly higher today and sits just above Wednesday’s highs, while volatility has compressed following the release of the jobs report.
Nonfarm payrolls missed expectations by roughly 10,000 jobs, which appears immaterial, while the unemployment rate declined, wage growth remained firm on a year-over-year basis, and average weekly hours eased slightly but stayed within a normal range.
The household survey showed 232,000 jobs added, a decline in the number of unemployed individuals, and a modest contraction in the labor force, reflecting typical participation dynamics. Taken together, the data suggests some tightening in the labor market relative to recent months and raises the possibility that the softness seen over the summer may be starting to ebb.
In rates, the 12-month forward three-month Treasury rate minus the current three-month rate has risen to negative 5 basis points, a move that has been trending higher since October and implies the market expects little additional policy easing.
