Jobs Blowout Rocks Markets: What It Means for 2025 | SPX Market Analysis 10 Jan 2025

Ahoy there Trader! ‍‍⚓️

It’s Phil…

The markets are buzzing after a surprise December jobs report shattered expectations. A whopping 256,000 jobs added, a drop in unemployment to 4.1%, and a hot labour market have sent shockwaves across stocks, bonds, and beyond. But don’t celebrate yet – the ripple effects could shape the Fed’s next moves and the entire 2025 rate outlook. Let’s dive in!


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Job Market Breakdown:

  • December’s Non-Farm Payrolls blew past expectations: 256k jobs vs 165k expected.
  • Private payrolls added 223k jobs, while the household survey showed a staggering 478k gain.
  • The unemployment rate fell to 4.1%, marking a robust end to 2024.
  • Wages disappointed slightly, rising 3.9% YoY vs the expected 4%.

Market Reaction:

  • Treasury yields soared, with the 30-year hitting 5% – the highest since 2023.
  • The 2s10s yield curve steepened to 39bps, its sharpest slope since May 2022.
  • Stocks didn’t take the news well, with the S&P (-1.5%) and NASDAQ (-1.7%) retreating.

Fed’s Rate Cut Dream Fades:

  • Futures now price in just 30bps of rate cuts in 2025, compared to 38bps pre-report.
  • Bank of America says the Fed cutting cycle is over and hints at possible hikes if inflation persists.
  • Goldman Sachs slashed its 2025 rate cut projection from 75bps to 50bps.

What’s Next for Traders?

  • Keep an eye on CPI data next week – it could reignite market volatility.
  • Gold surged over 1%, reflecting inflation concerns, while Bitcoin stayed flat at $94k.
  • The labour market’s resilience keeps the economic debate alive: Are we heading for more growth or gearing up for a slowdown?

Fun Fact

The U.S. added a record 6.4 million jobs in 2021, rebounding from pandemic lows. While job growth has slowed since then, 2024’s addition of 2.2 million jobs remains a testament to the economy’s durability.

The pandemic saw the U.S. economy shed millions of jobs overnight, but the recovery was equally swift. In 2021, a record 6.4 million jobs were added, thanks to a surge in economic activity. While job growth has since cooled, the steady gains in 2024 highlight a resilient labour market even as inflation and rate hikes challenge broader economic stability.


Happy trading,

Phil

Less Brain More Gain

…and may your trades be smoother than a cashmere codpiece

 


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