MNI US Employment Insight: Dovish Details vs Dovish Pricing

Download Full Report Here

Executive Summary

• The establishment survey saw payrolls growth almost as expected in February, but average hourly earnings growth and average hours worked in particular underwhelmed.
• The household survey also leaned dovish, with the unemployment rate surprisingly increasing to 4.14% (cons 4.0 albeit with some risk of 4.1) despite a surprise drop in the participation rate. Further, the underemployment rate jumped 0.5pps to 8.0% for its highest since Oct 2021 with the spike driven by the large increase in those working part-time for economic reasons since mid-2023 and before that the pandemic.
• Treasuries saw a modestly dovish reaction to the release, having reversed a puzzling snap sell-off as headlines hit, with the magnitude of the report heavily contained by the market gearing up for a particularly soft report following a spike in Challenger job cut announcements the day before.
• We have only seen one tweaking of analyst rate views on the back it: Jefferies bring their three cuts in 2025 forward from Jun, Sep and Dec to Jun, Jul and Sep.
• Fed Funds futures priced a little more than 75bp of cuts for 2025 after the release before sub 70bps after Powell reiterated there was no need to hurry to cut rates.