(Finance) – Perhaps the most important indication that emerges fromUS employment report of January 2024 is that the the labor market was significantly more robust than expected not only in the first month of 2024 but also for the entire second half of 2023, which implies that wage pressures (beyond the increase in January, which was, as mentioned, affected by the weather factor) may be more persistent over time than expected previously estimated. The economists of the Studies and Research Directorate point this out Intesa Sanpaolo.
According to data provided by the Bureau of Labor Statistics, new nonfarm employment in the United States increased by 353 thousand unitsa high since January last year and a much stronger figure than expected, while data from previous months have been revised significantly upwards.
“This provides further arguments to our idea that the Fed may start cutting rates later (and, during 2024, less) than expected by the markets. After the data, the market further reduced expectations of rate cuts in the spring months, which we judged to be too aggressive: now, a first intervention in May is no longer even fully priced in”, write economists Mario Di Marcantonio and Paolo Mameli.
“We believe that market expectations on Fed cuts still remain too dovish, even if the gap compared to our expectations has narrowed – it is added – Let’s now see a first 25bp cut in June and a cumulative decline totaling 75/100 basis points over the course of this year (futures are currently pricing in cuts of 43bps by June and 123bps by the end of the year).”