Making Sense

On the NFP Print, the headline print show total Non-Farm Employment rise by 353,000 for the month of January 2024. The January print follows upward revisions to both November and December numbers to the tune of +9000 and +117000. The payroll employment increased by an average of 255K for 2023. The U/R was steady at 3.70% over the last 3 months. The AHE rose 0.55% mom and 4.48% yoy , reversing the deceleration seen since Aug 2023. Under the hood, the change in Labor Force is to the tune of -175000 driven by a change of -144000 in Unemployment level and -31000 in Employment Level. The Labor Force has shrunk by 621000 over the previous 4 months. The average weekly hours have also reduced to 34.10 weekly hours. The average number of hours worked, hit its lowest level since 2010, barring the dip during Covid. The below graph is a good way to visualize the NFP data. This month’s data also had a lot of noise on account of benchmark revisions. It involves comparing the monthly employment...

Nasdaq led losses closing 2.47% lower on the day and S&P 500 closed 1.43% lower on the day. Yields on US2s rose 8 bps off lows to days high of 5.13%, the moves on US10s were dramatic , rising as much as 16 bps off lows to trade a high of 4.97%. US2s10s curve steepened with highs seen at -17 bps. On Tuesday, the spread had widened to as much as -30 bps. US Equities and Bonds tanked while Crude Oil, Bitcoin and USD index gained strength. 759,000 New Homes were sold in the US far more than consensus estimates of 680,000. After the strong PMI data release, the new home sales number only supports the Fed's case for higher for longer. Mike Johnson was elected as House speaker and WSJ writes "The quick take on Wall Street seems to be that this makes the possibility of a government shutdown a little less likely". On the implied Fed Fund Pricing, Dec 2024 pricing shifted 5 bps higher to 4.68% while the pricing for peak terminal rates was unchanged at 5.43%. The Geo-political s...