It's all concerning the US jobs report at present

The pattern is evident in that the US labour market has been softening after a strong rebound within the post-Covid period. That’s to be anticipated however we’re now approaching the stage wherein market gamers had been anticipating this to result in a tender touchdown within the US financial system since final yr.

As a substitute, the US financial system has been moderately resilient and that’s additionally exemplified by the labour market – even when issues are easing there.

Because the Fed seems to pause the speed reduce cycle, this shall be a key space to observe within the months forward. If labour market situations maintain up alongside inflation information, it is going to validate the Fed outlook to remain on the sidelines whereas letting for Trump’s insurance policies to play out.

But when the information worsens, then there shall be trigger for concern in pressuring the Fed to renew fee cuts to begin the brand new yr.

Given what’s at stake, this would be the level on the agenda in buying and selling at present. Nothing else will matter as a lot.

For now, Fed funds futures are ruling out a 25 bps fee reduce for later this month with ~93% odds priced in that the Fed will maintain charges unchanged. The primary full fee reduce is simply priced in for June with ~42 bps in whole priced for this yr. The swings, if any, in pricing right here shall be what dictates broader market sentiment earlier than we get to the weekend.

This text was written by Justin Low at www.ubaidahsan.com.



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