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The US economy added 353,000 jobs in January, almost twice as many as expected, leading investors to rein in expectations of interest rate cuts.
Economists had expected the country to have added 180,000 jobs last month, according to an LSEG survey.
Treasury yields jumped while stock futures dropped after publication of the figures, as expectations of rate cuts as soon as early spring were dashed by the evidence of the labour market’s strength.
“This should cool the market sentiment toward early rate cuts,” said Stephen Stanley, chief US economist at Santander.
He added that although the 353,000 was “exaggerated by seasonality, the data was “strong across the board”.
The two-year Treasury yield, which moves with interest rate expectations, built on earlier gains, rising 0.19 percentage points on the day to 4.39 per cent.
Futures traders scaled back bets that the Federal Reserve would cut interest rates in March. Following the jobs numbers, expectations of a cut were around 19 per cent, compared to 37 per cent before the report.
Traders also took off bets on an interest-rate cut in May, putting the odds at around 84 per cent. Before the report, a cut in May had been fully priced in.
S&P 500 futures dropped following the release, but remained higher on the day.
Revised figures in Friday’s jobs report showed that the US had also added many more jobs in than previously thought, according to the Bureau of Labor Statistics data.
US workers’ average hourly wages grew by 0.6 per cent to $34.55 — up 4.5 per cent over the past 12 months.
The January non-farm payrolls figure compares with a December number of 333,000, revised up from a first estimate of 216,000.
Figures for November were upgraded too, by a more moderate 9,000 to 182,000, indicating that the US labour market is hotter than policymakers and economists thought.