January 7, 2022
Good morning,
The December employment numbers were released at 8:30 am ET this morning to mixed results. The headline number was well short of expectations with only a 200,000 increase in payrolls vs 450,000 expected. Not a good headline for the economy, but beneath it the numbers exceeded expectations with the unemployment rate dropping into the three’s at 3.9% vs 4.2% expected. A three handle is notable because that’s the pre-pandemic level and it gives the Fed more supportive data for their tightening. The initial market move: Futures sink a tad -.15%, bond yields lift a bit on the 10yr (+3bps to 1.75%). The bottom line from this morning’s data; it is more evidence of a tight labor market. This may rachet up fear of a faster tightening Fed than forecasted.
A reprint of the monthly letter accompanying client performance reports can be found here. It is a look ahead with a hat tip to last year’s model performance.
Hope you have a great weekend.
Be well,
Mike