The strong labor report shifted focus back to Federal Reserve policy. Markets had recently debated when the Fed could cut rates. However, Friday’s data raised questions about whether officials may need to hold rates higher or even consider another hike.
Stephen Coltman, head of macro at 21Shares, warned that the policy debate may be changing. “With the inflation and employment data where they are now, the debate is quickly moving on from ‘when will the Fed be able to cut’ to ‘why isn’t the Fed hiking?!’”
He also said a move from a dovish stance to a could be hard for markets to absorb. However, that view reflects one market reading of the data, while officials have not yet made their next policy decision.
Mark Malek, Chief Investment Officer at Siebert Financial, offered a more measured view of the labor market. “You’re not talking about a labor market that’s doing fabulous, but you’re also not looking at a labor market that’s completely crumbling.”