The relentless rise in interest rates as prospects for generous Federal Reserve cuts diminish will be tested this Friday by the latest US labour market report.
High frequency jobs indicators, such as the weekly jobless benefit claims, show no signs of deterioration, and we expect another month of solid, albeit unspectacular, job creation.
The key number in our view will be the evolution of wages.
These have grown for the last few months at a monthly pace of 0.4%, nearly 5% in annualised terms. However, with just one-and-a-half 25bp cuts priced in for all of 2025, a lot of US economic strength, and inflationary pressures, is already in the price of an extremely expensive US Dollar. For this reason, we could see a sharp pullback in response to any data disappointment out of the US.
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
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