US resilience continues
The US nonfarm payrolls figures whacked expectations, rising +256,000 in December with only modest downwards revisions to preceding months.
The unemployment rate unexpectedly fell back to 4.1 per cent (and underemployment measures tightened).
The growth in average hourly earnings was a bit lower than expected at +3.9 per cent over the year - and there were some debates about the strength or otherwise of full-time employment - but overall this was a much more solid than expected set of numbers.
Markets are pricing just one interest rate cut in the US for 2025 as a result.
Meanwhile, there's some interesting stuff going on in UK bond markets again, since the new government came to power in July.
A punishing combination of higher wages costs, steepling healthcare commitments, and expensive renewables have seen spending plans expanding.
The government is aiming to tackle funding challenges through VAT on private schools, an increase in employers' National Insurance taxes, and cuts to pensioner fuel allowances (capital gains taxes and alcohol could yet be in the firing line next).
With the UK economy going backwards, 30 year gilt yields have soared to a level approaching 5½ per cent - higher than the level which embarrassed the previous government into a leadership change - leaving very little fiscal headroom, and there may need to be some spending cuts announced imminently to shore up markets.
The falling pound is not helping either, as it may result in higher oil and petrol prices ahead for the UK.
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For Australia, the major bank economists are split on their outlook for monetary policy, with two expecting a rate cut in February (ANZ and Commonwealth Bank), and two (Westpac and NAB) expecting a delay until May.
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