Another pretty busy week behind us. The data for two most important elements of monetary policy were released last Friday.
NFP printed way above expectations. We saw 242K vs 195K prior. This is a huge boost to US employment.
Unfortunately, markets didn’t care too much about new jobs.
All eyes were on the Average Earning report. This came as a big disappointment and contracted by negative 0.1%. Market expected a growth of 0.2%. No wage inflation for US this time.
It seems like inflation is much needed to force FED to deliver promised back in December 2015 -1% discount rate.
At this stage(mid-March), it seems unlikely in 2016.
NFP printed way above expectations. We saw 242K vs 195K prior. This is a huge boost to US employment.
Unfortunately, markets didn’t care too much about new jobs.
All eyes were on the Average Earning report. This came as a big disappointment and contracted by negative 0.1%. Market expected a growth of 0.2%. No wage inflation for US this time.
It seems like inflation is much needed to force FED to deliver promised back in December 2015 -1% discount rate.
At this stage(mid-March), it seems unlikely in 2016.
Having said that, markets increased their expectations of interest rate hike for 4th consecutive week.
It worth mentioning that each month almost doubled in probability since 10th January.
50% probability is now priced for as early as July.
The biggest weekly rate of increase was recorded for September and November.
These months are now priced at 58% and 61% respectively.
March is priced in @ 0%. This is down from 2% previously
April is priced @ 20%. This is unchanged from 20% previously
June is priced @ 44%. This is up from 32% previously
July is priced @ 49%. This is up from 35% previously
September is priced @ 58%. This is up from 43% previously
November is priced @ 61%. This is up from 47% previously.
December is priced @ 72%. This is up from 59% previously.
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