It’s been an interesting weekend for U.S. economic data, if you can really call economic data “interesting,” which, if you’d told me I’d be writing five years ago, I would have openly laughed in your face. (Then I realised there was basically no labour competition in finance journalism, so here we are.)
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But really, there are some questions to be asked. Let’s start with Friday’s CPI read, though, because that story might be counterintuitive.
Which is to say we aren’t seeing tariff pains translate into higher prices on the shelf, per the way they’ve been reported under this administration at least, which is to say that yes, I’m suggesting the data might be getting more massaged than usual. If that is the case, though, would Wall Street even care? I doubt it.
US inflation welcome, but not catalysing
Still, even accounting for a U.S. holiday Monday Australia time, U.S. futures were only flattish green after we learned inflation came in less-hot-than-expected last Friday at 2.4% for January; core inflation sits at 2.5% for the 12mths to Jan.
So that might suggest that the Federal Reserve could be more likely to cut rates when it meets next month, given inflation appears to be calmer than feared; however, we haven’t seen that clearly evident on futures yet.
Nor have we seen it on prediction market Kalshi, where the overall odds on a possible March rate cut are basically unchanged at time of writing; the overwhelming majority still seem to be saying the Fed will pause. Only 8% of punters on that platform reckon there’ll be a 25bps cut; last Thursday it was 7%.
Perhaps a more sober indicator that we can use, the CME Group’s FedWatch tool, was pricing in a 93.6% chance of a Fed hold last Thursday; as of Monday afternoon, it’s at 90.2%. Again, not really much difference.
Biggest jobs revision in 20 years(!)
But amongst those who did change their bets – whether openly called “bets” or treated with a bit more self-respecting language – perhaps they were watching the largest downward revision of jobs data in 20 years.
It’s come out that across CY25, there were some 1,029,000 jobs counted, which, it turns out, didn’t exist. So it was that U.S. labour market saw its largest downward revision in two decades last week – following downward revisions of 818K roles in CY24 and -306K in CY23. That number is rising yearly.
Over the last three years, over 2.15M jobs have been revised out of early-stage reports, which is another way of saying that over the last three years, 2.15M jobs that didn’t exist have been counted, at first, into labour market data.
When you consider that, and the performance of the S&P500 and NASDAQ (and yes, even the Dow Jones) over the last three years – no wonder Wall Street doesn’t care about economic data.
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