Payrolls surge
There had been some conjecture about a negative payrolls print in the U.S., following on from comments made by White House press secretary Jen Psaki about widespread Omicron sickness in January.
Not so in the end, with employment rising by +467,000, and a monster upwards revision of +709,000 for the preceding two months.
With over 1½ million added to employment over the past three months, total payrolls could return to the pre-pandemic peak by July at the current pace of progress.
Average hourly earnings were up 5.7 per cent over the past year, to $31.63.
Forward rates inverted
With the participation rate rising to 62.2 per cent, the unemployment rate ticked a notch higher to 4.0 per cent (although the trend remains down).
The Federal Reserve thinks that the unemployment rate can fall to 3 per cent in this cycle, or perhaps even lower.
Financial markets are becoming fairly excited about the prospect of multiple rate hikes in 2022, though it's worth noting that the implied Fed Funds rate is priced to peak at under 2 per cent in 2024, with markets pricing in rate cuts thereafter.
Inflation breakeven curves tell a similar story - inflation is likely to run at around 3 per cent for a couple of years, before fading back towards 2 per cent.
In Australia, the Reserve Bank released its Statement on Monetary Policy yesterday, with the economic outlook forecasting a similar scenario, with trimmed mean inflation expected to run above 3 per cent temporarily, before returning to around 2¾ per cent by the end of the forecast period.
Source: RBA
