Job market remains strong, offering no immediate need for Federal Reserve to implement interest rate reductions
Kickin' it with the Feds amidst Trump's trade bedlam 🔥
Businesses are feelin' the heat as they adjust to Trump's topsy-turvy trade policies, but Federal Reserve policymakers got a dash of relief on Friday when the job market showed some serious resilience 💪.
U.S. employers churned out 177,000 jobs in April, according to the Labor Department, while the unemployment rate stayed put at 4.2%. That's a pretty solid sign that the labor market's aforementioned balance is still intact, even though Trump just whacked on the steepest tariffs in, like, forever. These tariffs spooked the stock market and wreaked havoc on the bond market before Trump hit the brakes on those levies until July.
The Fed's gonna hold off on rate cuts for now, as the job market's holdin' steady and inflation's still above their 2% target. Hourly earnings climbed up 3.8% year-over-year, according to the jobs report, in the same ballpark as the Fed's 2% inflation target.
Lindsay Rosner, head of multisector fixed income investing at Goldman Sachs Asset Management, said, "With the labor market keepin' it together, the Fed's got room to play it cool. But if the forward-lookin' glimmers start to fade, there's a chance they'll revive the easin' cycle later this year."
If the future looks grim, traders are bettin' the Fed will start cuttin' interest rates in July. Earlier, they thought June was a more likely month for rate cuts. By year's end, traders predict three quater-point interest rate cuts, one fewer than previously.
Trump echoed his own call for the Fed to relax on the rates after the report. The Fed, though, said they'd listen to the economy's needs, not Trump's desires, when makin' their moves. The Feds are keen on avoidin' another inflation surge since the tariffs are expected to jack up prices, at least temporarily.
Minus a crumble in the job market, the labor market's holdin' strong. In fact, more folks joined the labor market in April than left, by the most since August 2023 – a show of strength.
BMO economist Scott Anderson wrote, "Big picture, the U.S. labor market's yet to cower to the gloomy vibe buildin' up amongst consumers and businesses, though the full force of the tariffs shock is still comin' at us."
'18 was a year the Fed approached Trump's trade policies with cautious hands, monitorin' the economic impact of tariffs and potential countermeasures. While the trade tensions didn't devastate the labor market or force drastic changes in monetary policy decisions last year, prolonged trade tensions could lead to slower job growth if businesses faced increased costs and supply chain disruptions.
In brief, although the Feds dealt with the trade drama with an air of reservation in '18, it didn't prompt major shifts in monetary policy decisions, such as interest rates or significant labor market impacts at that time. Keep an eye on job growth and economic indicators through 2019 as the trade war unfolds. 🤝✌️💼⚖️📈🔥
- With the labor market holding strong and inflation still above the Federal Reserve's target, Lindsay Rosner, head of multisector fixed income investing at Goldman Sachs Asset Management, predicts the Fed may have room to maintain a cool approach.
- If the future looks grim, traders are betting the Federal Reserve will start cutting interest rates in July, a move that was previously predicted for June.
- By year's end, traders predict three quarter-point interest rate cuts, one fewer than previously.
- Trump echoed his own call for the Fed to relax on the rates after the report, but the Fed said they'd listen to the economy's needs, not Trump's desires, when making their moves.
- In April, more people joined the labor market than left, by the most since August 2023, a show of strength.
- Minus a crumble in the job market, the labor market is holding strong, but the full force of Trump's tariffs is still anticipated to impact prices, at least temporarily.
- '18 was a year the Fed approached Trump's trade policies with cautious hands, monitoring the economic impact of tariffs and potential countermeasures. While the trade tensions didn't devastate the labor market or force drastic changes in monetary policy decisions last year, prolonged trade tensions could lead to slower job growth if businesses face increased costs and supply chain disruptions.
