Market Brief, North America

Rate-sensitive currencies and financial assets are retreating once again as overwrought monetary easing expectations undergo a forced unwind. Odds on a rate cut at the Federal Reserve’s March meeting have fallen below 65 percent from over 90 percent in December, with this morning’s non-farm payrolls report expected to show the US job creation engine continuing to churn out new roles. Markets think 170,000 new jobs were added in December, even as wages cooled and the unemployment rate rose to 3.8 percent. Data out yesterday showed continuing claims remaining low against an improved private sector hiring backdrop. Equity futures are softer,...

2024 is off to an inauspicious start. Ten-year Treasury yields are pushing toward the 4-percent threshold, equity futures are pointing to another day of losses, and risk-sensitive currency units are retreating against a resurgent dollar as traders turn incrementally more cautious on the likelihood of an imminent and aggressive easing cycle from the Federal Reserve. Investors are currently assigning circa-70-percent odds to a rate cut at the central bank’s March meeting, down from above 85 percent last week. The Fed will publish minutes taken during its December meeting this afternoon, providing insight into the thinking that motivated Jerome Powell’s dovish...