The first US jobs report of the year was an early reminder to investors that things don’t always go their way, despite the experience of the last couple of months.
Whether it was just exuberant festive cheer or something more, investors bounced into the end of 2023 full of hope that not only is the tightening cycle behind us, but 2024 will be the year of the soft landing and more rate cuts than you can count on one hand.
That may be proven to be correct, perhaps even not bullish enough, but it was going to be tough to sustain that positioning and build upon it early in the new year. We effectively needed all of the economic indicators to fall kindly from the off which was a big ask.
Today has, along with the FOMC Minutes on Wednesday, brought an early setback. But I don’t think either ultimately changes anything as far as the rest of the year is concerned. The labor market is still slowing gradually and while wages were a little stronger, the broader trend remains very promising.
Perhaps that would explain the response in the markets, with the dollar initially spiking as the report dropped before giving back those gains to trade lower than it did pre-release. US yields also reversed the initial gains while gold hit a new high for the day. None of this suggests traders are suddenly worried.
