Tuesday, 02 January 2024 12:17 GMT

June Fed Cut Ruled Out After Jobs Shock, December Now Focal Point


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(MENAFN- Investor Ideas) Investorideas ( newswir ) a trusted platform for investing ideas including oil stocks issues market commentary from deVere Group.

The Federal Reserve will likely cut US interest rates in December but leave them on hold this month following today's hot US jobs report, predicts the CEO of global financial advisory giant deVere Group.

The analysis from Nigel Green comes as US nonfarm payrolls surged by 172,000 in May, more than double expectations and one of the strongest monthly jobs gains of the year. The unemployment rate held steady at 4.3%.

Financial markets moved rapidly to reprice the outlook. According to CME FedWatch, US interest-rate futures lifted the probability of a December rate cut to 63% from 48% before the release, while expectations of any June move effectively disappeared.

Investors have consistently underestimated the strength of the US economy and overestimated the urgency for lower rates.

The CEO argues that today's figures strengthen the Fed's ability to remain patient as it continues its battle against inflation.

Bond markets reflected that reality immediately, with Treasury yields moving higher as traders pushed expectations for easing further into the future.

The US dollar also strengthened as investors reassessed the likely path of monetary policy.

Nigel Green says the jobs report marks another setback for those expecting an aggressive easing cycle.

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