Hot US jobs report tempers Fed rate cut outlook
Stocks on Wall Street rallied and the dollar rose on Friday, as bond prices fell, after another blowout U.S. jobs report suggested the Federal Reserve may delay cutting interest rates while it awaits further inflation data.
Gold prices hit record highs and the Mexican peso, which tends to benefit from strong U.S. consumer demand, appreciated the most since late 2015.
U.S. employers hired far more workers than expected in March and raised wages at a steady clip, the Labor Department said.
Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan, said investors are reassessing whether the Fed cuts rates three times in 2024.
«It might be two, it's too early to tell,» he said. «If the economy is running the way it's running now through most of this year, then it might be likely that the Fed does not cut interest rates this year.»
Expectations of rate cuts as soon as June declined along with the view for the size of rate cuts this year.
Data showing a cooling U.S. services sector and comments this week from Fed Chair Jerome Powell had reinforced the view that rate cuts were likely to commence in 2024. But on Thursday, Minneapolis Fed President Neel Kashkari said rate cuts might not be required this year.
The year-over-year change in the average hourly earnings cooled and will restore confidence that wage increases are normalizing, said Dec Mullarkey, managing director of investment strategy and asset allocation at SLC Management in Boston.
«Right now, this gives the Fed more reason to
