Inflation, Fed move keep pundits’ notice
The Fed has the luxury to continue to raise rates, with smaller rate hikes. And the labor market remains resilient
Daily TribuneThe Fed has the luxury to continue to raise rates, with smaller rate hikes. And the labor market remains resilient
Trader works on the floor of the New York Stock exchange. Wall Street stocks were mixed at the end of Friday's session as markets assessed the implications of a solid jobs report for US monetary policy. The world's biggest economy added 263,000 jobs in November, more than anticipated, while the unemployment rate remained at 3.7 percent, Labor Department data showed. | Michael M. Santiago/Agence France-Presse
Strong US jobs data last week raised concerns that the US Federal Reserve may continue to aggressively hike interest rates to tame inflation.
US government data showed that the world's biggest economy added 263,000 jobs in November, with the unemployment rate remaining at 3.7 percent.
Government figures also indicated a bigger jump in hourly wages than analysts had benchmarked.
Investors were unnerved by the jump in wages "because that tends to feed inflation," said Quincy Krosby of LPL Financial.
But traders also realize that "there's a positive side to this," she said. "The Fed has the luxury to continue to raise rates, with smaller rate hikes. And the labor market remains resilient."
The jobs data comes two days after Federal Reserve Chairperson Jerome Powell signaled the central bank could moderate its aggressive posture on interest rates as soon as this month.
Eye on the fuel market
Investors were also focused on the oil market, where prices finished lower amid focus on talks on a price cap to limit Russia's oil revenues.
Major oil-producing countries led by Saudi Arabia and Russia look set to maintain their current output levels at a meeting on Sunday, ahead of fresh sanctions against Moscow coming into force.
The 13-member Organization of the Petroleum Exporting Countries is due to consult with 10 other oil-producing nations, including Russia, to review their decision in October to cut production by two million barrels per day.
The OPEC+ videoconference will take place from 1100 GMT Sunday.
On Friday, the EU, G7 and Australia agreed a $60-per-barrel price cap on Russian oil, which will come into effect on Monday or soon after, alongside an EU embargo on maritime deliveries of Russian crude oil.
It will prevent seaborne shipments of Russian crude to the European Union, which account for two thirds of the bloc's oil imports from Russia, an attempt to deprive Moscow's war chest of billions of euros.
While Russia denounced the incoming price cap on Saturday, threatening to suspend deliveries to any country that adopted the measure, Ukraine suggested the cap should have been set even lower.
For OPEC+, the big unknown in the oil equation is how heavily sanctions will hit Russian supply.
"The uncertainty for Russian supply is significant," DNB analysts said. OPEC would therefore "aim for a low-profile meeting that leaves existing production quotas unchanged."
