MNI US Macro Weekly: More Volatility, But No Hurry To Cut

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Executive Summary

• Within the payrolls report, the establishment survey saw payrolls growth almost as expected, but average hourly earnings and in particular hours worked underwhelmed.
• The household survey leant dovish, with the unemployment rate nearly rounding to 4.2% with 4.139% after 4.01% despite the participation rate surprisingly falling, and underemployment rising sharply on a strong rise in those working part-time for economic reasons.
• However, the market had seemingly shifted particularly bearish on the labor market after weak ADP and Challenger job cuts releases, the latter amazingly having a larger reaction than payrolls, despite ISM services showing its highest employment series in three years.
• The week is finishing with a renewed hawkish repricing on the final Fedpseak ahead of the FOMC media blackout. Fed Chair Powell repeated guidance from Congressional testimonies on Feb 11/12 that there was no hurry to cut rates whilst also not sounding fully convinced on the ability to completely look through inflation rises on tariffs, whilst Governor Kugler talked on important upside risks to inflation.
• The February CPI and PPI releases swing into view in the week ahead after recent market focus on growth concerns, with the details as always watched for what they imply for core PCE inflation after a sizeable wedge with core CPI sequential inflation back in January.