Strong December Jobs Report Reduces Likelihood Of January Rate Cut

According to Odaily, Dakota Wealth analyst Robert Pavlik noted that the market's reaction to the stronger-than-expected non-farm payroll report aligns with his expectations. The report showed an employment increase of 256,000, which is beneficial for the general public but unfavorable for Wall Street. The market had hoped for data that matched or was weaker than expectations to prompt the Federal Reserve to shift from a wait-and-see approach to cutting interest rates. However, the report suggests the opposite, indicating that the economy does not require further rate cuts. Many of the jobs appear to have been created in the hospitality sector. Pavlik mentioned that if former President Trump were to deport 15 to 20 million people, it would result in more job vacancies. Goldman Sachs Asset Management's Head of Fixed Income, Lindsay Rosner, stated that the December non-farm payroll report does not provide an opportunity for the Federal Reserve to cut rates in January. At the end of last year, the U.S. labor market was fundamentally strong, with robust job growth, declining unemployment, and resilient wage pressures. The strong performance of the December employment report diminishes the possibility of a 25 basis point rate cut in January and shifts the focus to the March meeting, where further rate cuts will depend on inflation developments.