U.S. 216K Jobs Adds in December Tops Estimates for 170K

The U.S. economy added 216,000 jobs in the last month of 2023, ahead of economist estimates for 170,000 and above November's 173,000 (which was revised lower from an originally reported 199,000).

The unemployment rate was steady at 3.7%, beating estimates for a rise to 3.8%.

The price of bitcoin (BTC) - mostly focused for the past weeks on the prospects for approval of a spot ETF – dipped very modestly following the strong print and remained little changed for the day at $43,900.

Checking other data points from the report, average hourly earnings came in stronger than expected, rising 0.4% in December versus estimates for 0.3%. On a year-over-year basis, average hourly earnings were higher by 4.1% against estimates for 3.9% and up from November's 4.0%.

Traditional markets are off to a shaky start in 2024, with the Nasdaq, for instance, currently on a five-day losing streak, its first such string of negative days since late 2022. The 10-year Treasury yield – which plunged more than 120 basis points in the final quarter of 2023 on rate cut hopes – is up 25 basis points over the past few sessions and again topping 4%. Putting markets on edge is the idea that investors may have gotten ahead of themselves in predicting a sizable regime of rate cuts to come in 2024.

According to the CME FedWatch Tool, there's about a 65% chance of a U.S. Federal Reserve rate cut at or before the central bank's March meeting. And by year-end, markets are predicting nearly an 80% chance of 125 basis points or more of rate cuts.

While the economic data of late – modestly slowing growth and a continued softening in inflation – has confirmed the argument for the Fed to hold its benchmark fed funds rate range steady at 5.25%-5.5%, the numbers thus far, including this morning's jobs numbers, are a long way from making the case for a long, deep series of rate cuts.

In response to the report, U.S. stock equity futures have turned slightly lower, the S&P 500 down 0.2%. The 10-year Treasury yield is higher by seven basis points to 4.08% and the U.S. dollar index has moved up by 0.25%.