More Rate Increases to Follow U.S. Jobs Report; Bank of Japan Deputy Governor Reportedly Approached for Top Job at Central Bank

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More Rate Hikes to Follow US Jobs Report; Bank of Japan Deputy Governor Reportedly Approached for Top Central Bank Job By James Christie

The good day. It appears that the Federal Reserve’s campaign of aggressive interest rate hikes last year has not significantly cooled the US labor market, which could fuel more difficult debates in the central bank on whether it has done enough to reduce high inflation. US employers added 517,000 jobs last month and the unemployment rate fell to 3.4%, the lowest level since 1969, the Labor Department said Friday. The department also revised the reported earnings of previous months higher, suggesting that the economy had more momentum than previously anticipated. Taken together, it indicates that the Fed will raise interest rates by a quarter of a percentage point at its meeting next month and signal another increase is likely after that. Meanwhile, Japanese stocks rose and the yen fell on Monday after a report that Bank of Japan Deputy Governor Masayoshi Amamiya, perceived as more dovish than other potential candidates, has been approached by the government as a possible successor to the Governor Haruhiko Kuroda. The BOJ is increasingly isolated among global central banks by sticking to ultraloose monetary policy. Whoever replaces Mr. Kuroda, who steps down in April, has the difficult task of judging whether to adjust monetary policy for a period of higher inflation.

Now onto today’s news and analysis.

Top News Job Gains Keep Fed on Track to Push Rates Higher

New signs of a hot US labor market leave the Federal Reserve on track to raise interest rates by a quarter of a percentage point at its meeting next month and to signal another hike x ‘probably after that.

The Fed voted Wednesday to raise its benchmark federal funds rate by a quarter point to a range of 4.5% to 4.75%. The central bank is seeking to slow economic growth to a below-average pace to weaken demand and curb inflation, which has eased recently after hitting a 40-year high last year. has passed.

Mary Daly Says ‘Wow’ Jobs Report Doesn’t Disrupt Fed Projections

The Federal Reserve’s guidance on how much interest rates may need to rise remains a good policy indicator after Friday’s robust jobs report, San Francisco Fed President said Mary Daly, adding that she is ready to do more if necessary.

Upbeat Economic Data Keep Investors on Edge Over Japanese Fed Stocks Rally, Yen Wobbles on Next BOJ Governor Report

Japanese stocks rose and the yen weakened after a report that Bank of Japan Deputy Governor Masayoshi Amamiya had been floated as a possible successor to Governor Haruhiko Kuroda, who steps down in April.

US unemployment falls to 3.4%, lowest in 53 years, jobs report shows

January’s wage gain was the largest since July 2022 and snapped a streak of five straight months of declining job growth, and the unemployment rate was 3.4% last month , the lowest level since May 1969.

Restaurant, Health Care Jobs Led in January Hiring Increase Why Job Forecasts Often Miss the Mark

Banks Lend Unsecured Money at Record Clip As Depositors Flee

Lending in the fed-funds market reached $120 billion on January 27, the highest one-day total in Federal Reserve data since 2016. Fed funds activity picked up last year as the Fed raised interest rates at the fastest pace in decades.

States Are Flush With Cash, Which Could Alleviate A Possible Recession

State governments are entering 2023 with record reserves, as economic recovery from the pandemic and federal stimulus money have filled public coffers, allowing governments to bring in emergency funds.

Housing Market Shows Signs of Melting

Falling mortgage rates are beginning to stir demand in the housing market. The average 30-year home loan rate is down about a full percentage point from a 20-year high above 7% in November.

Childcare has not recovered from Covid

The high cost and limited availability of child care is keeping some parents out of the workforce when unemployment is at its lowest rate in more than half a century. That limited labor supply is also keeping upward pressure on costs.

Key Developments Around the World Group of Seven Agrees to Expand Sanctions on the Russian Oil Industry

The United States and its allies agreed to cap the selling price of premium Russian petroleum products such as diesel at $100 per barrel and cap low-value ones such as fuel oil at $45 per barrel , and expand sanctions on Russia’s oil industry.

War in Ukraine Tips Balance of Power Inside EU China Aids Russia’s War in Ukraine, Trade Data Shows Russia’s War Effort in Ukraine Buoyed by Turkish Exports The -Ukraine War Makes Turkey’s Erdogan Unexpected Winner

IMF Tempers Medium-Term Economic Growth Forecast for China

The International Monetary Fund now expects that in five years China will grow at an annual rate of 3.8%, according to its latest assessment of the Chinese economy, down from an October projection of 4.6%.

Caribbean Seeks Venezuelan Oil and Gas

Caribbean countries are turning to Venezuela for oil and gas as the US eases sanctions, with Trinidad and Tobago receiving a US Treasury Department license in January to develop a Venezuelan gas field.

Financial Regulation Roundup SEC Considers Speeding Up Climate Disclosure Rules

The SEC is considering easing planned rules requiring companies to disclose the effects of extreme weather and other costs related to global warming when the regulator finalizes its climate change proposals.

Bankman-Fried Robinhood Investment Vehicles Files for Chapter 11

Court appointed liquidators for Emergent Fidelity Technologies Ltd. in Antigua and Barbuda placed the investment entity under bankruptcy protection following the seizure of its assets by federal prosecutors last month.

How Bankman-Fried’s Psychiatrist Became a Key Player in FTX Crypto Crisis: Timeline of Key Events Guide Forward Monday (all times ET)

10 am: Conference Board Employment Trends Index for the United States for January

1 pm: Lagarde of the ECB meets the presidents of the European Council and the European Commission

10:30 pm: Reserve Bank of Australia interest rate decision

on Tuesday

4:00: Results of the ECB Survey on Consumer Expectations

8:30 am: Canada trade report for December; US trade report for December

10:30 am: Bank of England’s Cunliffe speech on central bank digital currency in UK Finance

12 pm: Fed’s Powell speaks at the Economic Club of Washington, DC; Schnabel of the ECB in a webinar on monetary policy in times of pandemic and war hosted by Finanzwende eV

12:45: Macklem speech of the Bank of Canada to the CFA Society Quebec

3 pm: US consumer credit report for December

Robust Research Jobs Report Means Fed’s Work Still Tough

With 517,000 new jobs in January and unemployment down to 3.4%, the Federal Reserve’s job just got tougher and hopes for a pivot from the central bank soon are fading fast, but so is the -recession fears, says the chairman of Navellier & Co. Louis Navellier. in a note. “The bond market looked at the payroll blowout numbers … and took yields hard,” and dollar firms while gold tanks, he says. “Could a few more light taps on the brakes by the Fed slow down this apparently strong economy? Recession risk is receding, the economy looks strong enough to handle a 5% funds rate , and money is coming out of the side for fear of losing,” says Mr. Navellier, while adding that low investment seems to be the risky strategy for now.

-Jonathan Vuocolo

US Labor Market tight to change economic forecast

“The January jobs report emphatically emphasized that the labor market is still hot and the demise of the US economy has been greatly exaggerated,” Stephen Stanley, chief economist at Amherst Pierpont , writes in a note on Friday’s US non-farm payrolls data. “Any way you slice it, this is a robust set of numbers, and the report should fundamentally change the prevailing economic narrative,” he writes, adding that the Federal Reserve “lives in a world driven by Phillips curve, so hot labor market data. will inevitably make a critical difference in how policymakers view the outlook for inflation.” Mr. Stanley also sees consumer prices accelerating in January and dashing hopes of painless disinflation this year.

-Paulo Trevisani

Commentary Parts of the Labor Market Like It’s 1969

The Federal Reserve is obviously pleased with how inflation has been cooling recently, but Friday’s jobs report adds to worries that wage growth could accelerate again, making inflation less tractable, writes Justin Lahart.

Key Points US service sector activity grew in the first month of the year, marking a rebound after December snapped a 30-month streak of growth. The Institute for Supply Management’s services activity index rose to 55.2 from a downwardly revised 49.2 in December, topping the 50.6 expected by economists polled by The Wall Street Journal. A reading of 50 marks the separation between expansion and contraction. (Dow Jones Newswires) Canada’s official international reserves increased by $2.65 billion in January, the federal finance department said Friday. As of January 31, foreign currency reserves and other monetary assets totaled $109.91 billion, up from $107.26 billion a month earlier. The government reported no intervention in the foreign currency market in January, and there were no gold holdings at the end of the month. (DJN) Indonesia’s economic growth slowed in the fourth quarter as government spending slowed. The economy grew 5.01% in the fourth quarter, compared to the same period a year earlier, Indonesia’s official statistics agency. The expansion slowed from growth of 5.72% in the previous quarter and was slightly above the median estimate for growth of 4.95% by a Wall Street Journal survey of six economists. (DJN) Brazil’s industrial production was stable in December from November after increases in the production of capital goods and consumer goods were balanced by a decrease in the production of intermediate goods. Production decreased 1.3% from a year earlier, the Brazilian

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02-06-23 0717ET

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