Wall Street was taken aback by the US labor market’s resilience in January. Another unexpectedly hot report could shake things up again.
Traders largely expect the Federal Reserve will begin cutting rates in June, according to the CME FedWatch Tool. But those expectations could shift again depending on how the latest labor data looks, some investors say.
“There’s no wiggle room for investors — even a slight upside surprise to job creation might rekindle fears about interest rates needing to be ‘higher for longer,’” wrote BeiChen Lin, investment strategist at Russell Investments, in a Monday note.
It’s not just jobs data on Wall Street’s radar. The January Consumer Price Index is due next Tuesday, and investors will watch closely, especially after price hikes eased less than expected in January.
“I would like to see inflation move down, a couple more data points, so we can be confident on that sustainable path to 2%,” Cleveland Federal Reserve President Loretta Mester said Thursday on CNBC, adding that she believes more moderation in areas like employment growth would put the Fed in a position to cut rates later this year.
Discussion about this post