The report released by the US Bureau of Labor Statistics on Friday (February 7) showed that the seasonally adjusted non farm payroll in the United States recorded 143000 people in January, significantly lower than the market's expected level of 170000, hitting a new low since October last year, with the previous value revised from 256000 to 307000. The unemployment rate recorded 4.0% in January, the lowest since May last year, and the market expectation remained unchanged at 4.1%.

The US Bureau of Labor Statistics stated that the wildfires in Los Angeles and the severe winter weather in other parts of the United States have "no significant impact" on employment this month. The changes in January employment data and the latest employment data at the beginning of 2023 show that the labor market is slowing down but healthy, continuing to drive economic growth without causing inflationary pressures. This also helps explain why Federal Reserve policy makers expressed a lack of urgency to further reduce borrowing costs after three interest rate cuts last year.

Interest rate futures traders expect the Federal Reserve to cut interest rates in May, rather than in June before the employment report is released.

After the release of the US non farm payroll data in January, the US dollar index rose slightly and broke the intraday high, now reporting 107.9454, an increase of 0.23% for the day. Spot gold first rose and then fell, with a 15 minute volatility of $18, but has now rebounded to pre announcement levels, rising approximately 0.2% to $2861.59 per ounce.

After the release of non farm payroll data in January, the euro fell 0.28% to $1.035. The Australian dollar fell sharply against the US dollar, hitting a new intraday low, but then rebounded and gave up its losses, now trading at 0.6281, a 0.03% intraday decline. The Canadian dollar rose 0.1% to 1.4291 against the US dollar before falling back.

After the release of employment data, the S&P 500 index futures fell 0.2% before trading. In the bond market, the yield of Canadian 10-year treasury bond bonds rose 6.5 basis points to 3.026%. The euro fell 0.28% to $1.035. British treasury bond bond futures fell about 40 basis points after the release of US labor data. The yield of German 10-year treasury bond rose slightly, and finally rose 0.5 basis point to 2.379%. Italian 10-year treasury bond bond yields rose, up 2 basis points to 3.46% at the latest.

Institutions look to the future market

Interest rate strategist Ira Jersey said that the continued disconnect between household surveys (unemployment rate dropping to 4% better than expected) and non farm employment reports (143000 new jobs added less than expected) will confuse the interest rate market. The steady acceleration of salary data has also brought more chaos. We suspect that as investors delve deeper into the data, the subconscious sell-off may not continue.

Analyst Anstey said that the non farm payroll in January undoubtedly confirms that the Federal Reserve will maintain a wait-and-see attitude at present. Given the current state of the job market, policy makers are unlikely to be eager to discuss restarting interest rate cuts.

Lindsay Rosner, Head of Fixed Income Investments at Goldman Sachs Asset Management, commented on the January non farm payroll data (email comment): "The data presented a mixed picture. The number of new non farm jobs was lower than expected, but the upward correction of previous data and the decrease in unemployment rate to 4% brought some positive signals. This month's data was affected by some one-time factors, including wildfires in California and cold waves in other parts of the country... We expect the Federal Reserve to remain cautious about this report and not overinterpret its underlying significance

Michael Collins, fixed income portfolio manager at PGIM, stated that this is another sign that the economy continues to maintain resilience. This is a strong economy. The Federal Reserve can now remain inactive. They may not take action (cut interest rates) this year, which is highly likely.

Jeff Rosenberg, Senior Portfolio Manager at BlackRock: In the first half of this year, the Federal Reserve will still be in a state of suspending interest rate cuts. The Federal Reserve needs more data to accelerate its pace of interest rate cuts.

XTB's Kathleen Brooks stated in a report that non farm payroll employment in January was lower than expected, but the unemployment rate unexpectedly fell and wage growth exceeded expectations. Brooks said that the downward adjustment of the annual benchmark is not significant, indicating that the labor market is still strong, only slightly weakened. We don't believe that labor market data will change the decisions of the Federal Reserve