Strong Nfp Tempers June Rate Cut Hopes

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Strong Nfp Tempers June Rate Cut Hopes

Strong NFP Tempers June Rate Cut Hopes

Friday's session led to a rally in Wall Street as the stock markets rejoiced after a stronger-than-expected jobs report. However, this development also means that the chances of a rate cut at the June meeting are now less than before.

Despite this, the NFP report was welcomed by the greenback and even the bond yields (short & long-term). For now, the bigger picture is that inflation is still alive and kicking, which means the rate cut will have to wait once again.

303,000 Jobs Added To Us Economy

During the month of March, an uptick in the employment rate was noticed as more people were hired than during the same period last year. The report showed that 303K jobs were added to the economy, which sent the unemployment rate from 3.9% to 3.8% only.

Additionally, around 22K more jobs were added if we compared with the Jan & Fed's forecasts. According to 3rd party economists, around 200K reading of NFP was expected during March.

According to an expert from Ameriprise Financial, investors will have to realign their hopes once again. Earlier, everyone was of the view that at least 3 rate cuts are happening in 2024. But given the data, it appears that even 2 rate cuts will be a big surprise.

They added that if the economy continues to show readings like this, the markets might as well forget about any rate cuts in 2024!

After the release of March 2024's NFP report, the odds of rate hikes at the June meeting have touched a new low. Furthermore, the size of the rate cuts by the end of 2024 has also taken a hit.

Despite all the odds against the rate cuts, the comments from Jerome Powell and the weakness seen in the US services sector hint at rate hikes sometime later in 2024.

However, some policymakers have decided to take a more cautious approach when it comes to the rate cuts. For example, Fed Kashkari added that rate cuts would not happen if inflation failed to go down.

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