But that’s what they got on Friday, when the Bureau of Labor Statistics’ latest jobs report showed employers added 431,000 to payrolls last month and the unemployment rate fell to a two-year low of 3.6%. All are signs of a strong labor market with little need for the kind of super-easy monetary policy that the Fed is currently delivering and has begun to unwind.
Futures contracts tied to the Fed’s policy rate fell after the jobs report, as expectations intensified that the Fed will go bigger at next month’s meeting and again in June, hiking by a half-a-percentage point each time to deal a more decisive blow to price pressures.
Rate futures contracts reflect odds-on bets for the policy rate to end the year in the range of 2.5% to 2.75%, with about a one-in-three chance of going even higher. Either way that is high enough to put the brakes on growth.
It was just two weeks ago that the Fed raised interest rates by a quarter-of-a-percentage point in its first policy tightening in three years, and signaled ongoing rate hikes ahead to rein in inflation at a 40-year high and climbing.
