An unusually busy week of economic data in the US sent conflicting signals for the Federal Reserve. January payrolls rose by the most in over a year, and the unemployment rate unexpectedly fell, allaying concerns that the job-market weakness from the previous year had carried over. However, inflation data at the end of the week was relatively tame, boosting bets that the central bank will deliver more interest-rate cuts this year.
According to the Bureau of Labor Statistics, employers added 130,000 jobs last month, and the unemployment rate declined to 4.3%. This followed revisions to the prior year, which showed the average monthly pace of job growth was a fraction of what was initially estimated.
Meanwhile, US inflation was fairly mild in January, defying concerns for a bigger jump. January inflation readings have been strong in recent years, often beating expectations as companies tend to raise prices at the start of the year. As a result, Treasuries rallied in relief as the core figure came in relatively tame and in line with median projections.
In a sign of potential strain on consumers, delinquency rates on loans ranging from mortgages to credit cards rose to 4.8% of all outstanding US household debt in the fourth quarter. This is the highest level since 2017, driven by higher defaults among low-income and young borrowers.
Internationally, Japan’s ruling party achieved its biggest post-war victory in a general election, an extraordinary transformation of fortunes that sent stock prices and bond yields soaring. In the UK, the economy grew less than forecast in the fourth quarter as business investment shrank and services stagnated.
Russia’s crude shipments are holding steady despite mounting pressures on its critical oil trade, though steeper discounts have hammered government revenues. Elsewhere, monetary policy decisions varied: Hungary’s inflation plunged to its lowest level in almost eight years, while Mexico’s inflation accelerated, supporting its central bank’s decision to pause a record easing cycle.
