Jobs Report Sinks The Stock Market: Here’s What Happened
the jobs report was released this Friday morning and it smashed expectations however it’s hurting the stock markets apparently the results were just too good so I’m going to explain to you what is going on so in the month of December 256,000 jobs were added and the unemployment rate decreased to 4.1% so this crushed expectations analysts were expecting it to be around 150,000 jobs added so take a look at this this is the number of jobs added each month over the past two years so as you can see this was a solid month and
here’s the trend of the unemployment rate so according to the report the labor markets is solid so that begs the question why is the stock market reacting so negatively to this great news it’s because if the labor market is so strong then that means that the Federal Reserve is not going to cut interest rates at their next meeting or maybe even two you know which is not good for stocks so listen I’m reporting this in the morning and markets are down but of course we’ll see where this closes at the end of the day
now I want to show you the market expectations of what the Federal Reserve is going to do about interest rates at their next meeting which takes place on January 29th so there was a 93.1% chance that the Federal Reserve does not cut interest rates at that meeting so those were the odds as of this morning right before the report came out after the results came out the chances of the Federal Reserve not cutting interest rates increased to 97.3% so this is all according to the CME fed watch tool so as I told you in
December the Federal Reserve is not going to cut interest rates in January okay now I want to show you the odds of what will happen at their meeting on March 19th so this is so important for you to see before this report there was a 57.7% chance that they would not cut interest rates at their March meeting either but after this report it’s now increased to 74% chance that they’re not going to cut interest rates in March either so that is a big jump in expectations so essentially this means higher interest rates for longer because
again if the labor market is doing so well then why are they going to cut interest rates at all I mean they have no reason to additionally there’s growing concern of inflation reaccelerating and if they cut interest rates then of course that would fuel inflation now turning back to the labor market I want to show you these visuals coming from the jolts reports so job openings I mean as you can clearly see have been falling since 2022 so labor market has been softening you know there’s no doubt about it
here’s the number of job openings per unemployed person of course way down compared to 2022 and layoffs I mean take a look for yourself they’ve been increasing for the past 3 years so of course the big question is will these all stabilize around these levels or will the labor market continue to weaken but I want to show you what the Federal Reserve thinks and let’s see if they get it right or wrong in December the Federal Reserve gave their projections it’s in their SCP their summary of economic projections so in their SCP you
can see that they expect that the rate of unemployment will end this year 2025 at 4.3% but just the prior month I we were at 4.2% but now it’s Fallen to 4.1% so their expectation is that the labor market will continue to remain strong for the rest of the year okay so I’m just going to leave it right there short and sweet Please Subscribe I thank you for the support and I wish you a very nice weekend take care
