Yields have now more than completely retraced their post-FOMC drops, both at the short and long end of the curve. Can't recall a single economic report that moved the bond market as much as Friday's jobs number.
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Neil Irwin
@Neil_Irwin
Chief Economic Correspondent at Axios and author of Axios Macro newsletter.
Author of "The Alchemists" and "How to Win"; Formerly: NYT, WashPost.
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Does the lottery take people's money or pay out money to people? Both. Pay to have a chance to get paid for a viral tweet. That's how I'd do the product if I was in charge anyway.
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Like, for 13 years I have been delivering economics news and analysis and occasional dumb jokes on this platform in exchange for building my reputation/reach.
Who should be paying whom? I don't know! The past practice has been that no money changes hands.
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I remain confused as to whether the strategy is "charge content producers for the chance to achieve reach" or "compensate content producers for making good content for Twitter dot com."
Sounds like both at once?
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The nowcast we get on Tuesday is likely to be *very* screwy — aggregate hours worked grew 15.7% annualized in January, and even if you assume 0% productivity growth that would mean 15.7% real GDP growth… (we obviously need another month of data)
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Like $20 bills on the sidewalk and free lunches, falling inflation combined with falling unemployment is supposed to be the stuff of economics fiction
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FWIW, the Powell event Tuesday at the Economic Club of DC is Q&A only — no prepared speech. That said, he is more than capable of sending a policy message in that format. I saw it up close in January 2019.
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Lotsa data between now and then, but gonna be fascinating to see the March FOMC dot-plot.
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Presumably this wild payrolls number involves statistical noise or mismeasurement.
But the overall narrative of "extremely robust job market" is supported by establishment and household surveys, claims, JOLTS, anecdata. Just no question about the fundamental labor market story.
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It's not like the tech/media layoffs aren't evident in the jobs report; the information sector lost 5k jobs, with declines in publishing, broadcasting, and computing infrastructure/data/processing/web hosting.
It's just that 5k isn't a hill of beans in an economy with 155m jobs.
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Powell's appearance at the Economic Club of DC on Tuesday just got more interesting.
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You don't see that every day.
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Short end of treasury market repricing for Fed staying higher for longer.
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Here is the Billboard #1 song from the last time the unemployment rate was this low:
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A couple of Fed folks have pointed to recent declines in temporary help employment as a leading indicator of labor market softening. The sector added 26k jobs in January.
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Live shot from the Fed
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read image description
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I'm starting to think — stay with me here — that the tech and media sectors are not indicative of the labor market as a whole.
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After population adjustments, household survey showing unchanged labor force participation and employment-to-population ratio.
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Average hourly earnings +0.3%, year-over-year +4.4%. In line with expectations, but not decelerating as you would want to see in a purely dovish story.
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March rate hike even more of a done deal, May too. No pause in tightening soon.
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Can't Stop Won't Stop: The Post-Pandemic Labor Market
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+517k on payrolls, unemployment rate down to 3.4%
Holy moly this job market is incredible.
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Five minutes to go!
Forecast for January jobs report: +190k payrolls, unemployment rate ticking up to 3.6%, +0.3% average hourly earnings growth.
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Thread:
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Tomorrow is #JobsDay, my favorite day of the month! Except that tomorrow's report is going to be so, so, SO annoying. Quick, nerdy thread on why:
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Whoa! Roberto Perli, one of the best Fed analysts, is joining the New York Fed as head of SOMA desk — the unit that carries out U.S. monetary policy.
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Fantastic thread and piece.
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America's chick situation offers up some important insights about the economy.
A thread. (1/)
nytimes.com/2023/02/02/bus
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Yields just keep on tumbling.
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People were expecting Powell to beat the market over the head and force it into submission over the "pivot". Instead, he politely agreed to disagree...
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Takeaways from Chair Powell:
- Fed doesn't want to prematurely declare victory
- But disinflationary process has started
- We're talking "a couple more" rate increases
- No expected 2023 cuts
- Soft landing = base case
- Raise the debt ceiling!
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S&P 500 intraday back to levels last seen on the way down the day of Powell's Jackson Hole "pain" speech in August..
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I think that coincides with his response to question on disinflation in the labor market, in which Powell said it is gratifying to see the disinflation process get underway.
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Bond market hearing Chair Powell as dovish.
Note that the rates plunge started not at the FOMC statement (14:00) or Powell initial prepared statement (14:30) but at about 14:38.
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Chair Powell following the script of 2013 Governor Powell:
"I wonder, on a number of grounds, whether it is wise for us to be disclosing the things we will and won't do... a month and half before the next debt ceiling crisis"
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Powell avoids any detailed discussion of what Fed would do in a debt ceiling breach scenario, just saying that raising the ceiling is the only path forward.
I wrote today about how the Fed will inevitably be in the thick of it if there is a breach.
axios.com/2023/02/01/fed
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Powell avoids any detailed discussion of what Fed would do in a debt ceiling breach scenario, just saying that raising the ceiling is the only path forward.
I wrote today about how the Fed will inevitably be in the thick of it if there is a breach.
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Purple tie day for JayPow
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Fed hikes rates a quarter point, keeps language that "ongoing increases" will be appropriate, implying at least two more rate hikes.
No pause signal here.
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As has been saying, the Beveridge Curve as a source of explanatory power for inflation is not looking good at all.
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Remember the "labor market softening will occur through the number of openings falling" narrative?
Well, um, the JOLTS are not cooperating. Openings +572k in December.
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