US OUTLOOK/OPINION: Citi Warn Low Churn Labor Market Isn’t A Healthy One
Feb-06 20:49
- Citi estimate nonfarm payrolls growth of 195k in January along with the unemployment rate remaining at 4.1% having been surprised by the strength of recent employment data. “This strength could largely reflect issues of seasonal adjustment that have led to consistently strong January employment data post-pandemic.”
- “A downside surprise to January employment could be dismissed as the effect of LA fires or cold weather, but we think the impact on payrolls from these factors should be small.”
- The strength of January data aside, they have not seen much evidence of a change from the recent dynamic of very low hiring & quits along with low layoffs "We continue to think that a low-churn labor market is not a healthy labor market and expect this weakness to become more evident in the spring. We continue to expect 125bp of cuts from the Fed this year.”
- Benchmark revisions to March 2024 level: “Preliminary estimates from the BLS implied an 818k downward revision to employment as of March, but revisions to Q1 QCEW suggest this could be closer to a still-substantial 700k downward revision in the final benchmarking.”
- They see AHE growth of 0.4% M/M in Jan after 0.3% in Dec. “Fundamentally, a loosening labor market should continue to imply easing wage pressures this year, with the ECI having slowed to 3.2-3.7% annualized in H2 2024. But average hourly earnings have also exhibited seasonal strength in January, similar to jobs and price inflation data. Wage increases could again be on the stronger side this year, although we do not expect an increase in average hourly earnings as strong as the 0.5% increase last year, implying that the year-on-year rate should fall to 3.8%.”
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
USDCAD TECHS: Bull Flag
Jan-07 20:40
- RES 4: 1.4674 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4353 @ 20:05 GMT Jan 7
- SUP 1: 1.4322/4280 20-day EMA / Low Jan 6
- SUP 2: 1.4232 Low Dec 17
- SUP 3: 1.4155 50-day EMA
- SUP 4: 1.4011 Low Dec 5
USDCAD traded lower Monday. The trend set-up remains bullish and the move down is considered corrective. The latest pause in the uptrend appears to be a flag formation - a bullish continuation signal. Note too that MA studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. 1.4322, the 20-day EMA, has been pierced. A clear break of the EMA would open 1.4155, the 50-day EMA.
US TSYS: Ylds Climb After Strong JOLTS Jobs, ISM Prices Paid Jump
Jan-07 20:28
- Treasuries have drifted sideways since establishing lows after this morning's data: JOLTS report saw surprisingly elevated job openings in November but the quits rate reversed a surprise increase from back in October. Job openings 8090k (cons 7740k) in Nov after an upward revised 7,839k (initial 7,744k) in Oct.
- Headline ISM index strengthened to 54.1, a little higher than the 53.5 expected (52.1 prior), with New Orders (54.2, 53.7 prior) and Employment (51.4, 51.5 prior) exactly matching survey expectations. But Prices Paid soared to 64.4 (57.5 expected, 58.2 prior), jumping by the most since January to the highest level in 22 months.
- The Mar'25 10Y contract slipped below Dec 26 low to 108-01.5 low (-15.5), 10Y yld climbing to 4.6972% high. Though Tsy curves climbed to new three year highs (2s10s 39.618), projected rate cuts for 2025 continued to recede with June 25 no longer fully pricing a 25bp rate cut. Current lvls this morning levels (*) as follows: Jan'25 at -1.2bp (-2.3bp), Mar'25 -10.2bp (-10.9bp), May'25 -14.7bp (-16.3bp), Jun'25 -23.2bp (-24.2bp).
- Reminder, much of Thursday's data has been moved to Wednesday (Wholesale Sales, Weekly Jobless Claims) as well as the 30Y Bond auction re-open to avoid conflicts with Thursday's Federal Holiday/day of Mourning for former President Carter. The CME Group FI trade closes at 1315ET Thursday. Thursday still includes Challenger Job cuts at 0730ET, Tsy 4- & 8W bill auctions at 1130ET, and several scheduled Fed speakers through the day.
AUDUSD TECHS: Tests Resistance At The 20-Day EMA
Jan-07 20:25
- RES 4: 0.6471 High Dec 9
- RES 3: 0.6400 50-day EMA
- RES 2: 0.6341 High Dec 18
- RES 1: 0.6273/0.6302 20-day EMA / High Jan 6
- PRICE: 0.6239 @ 20:02 GMT Jan 7
- SUP 1: 0.6179 Low Dec 31
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
Despite Monday’s gains, a bearish trend condition in AUDUSD remains intact. Recent weakness maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for an extension towards 0.6158 next, a Fibonacci projection. Initial firm resistance to monitor is 0.6276, 20-day EMA. It has been pierced. The 50-day EMA is at 0.6400.
