Financial markets are very happy with their porridge this morning. Equities are up, yields are soft, and the dollar is trading near a seven-month low. Friday’s just-right non-farm payrolls report, in which unemployment fell and wage gains were surprisingly muted, had a profound impact on investor psychology, convincing many that the Federal Reserve’s much-vaunted “soft landing” scenario is being borne out in the data.

The jobs numbers look incredibly positive: 223,000 positions were added in December, the unemployment rate fell back to a 53-year low at 3.5 percent, and revisions showed average hourly earnings growth subsiding to 4.1 percent year-over-year. A sustained deceleration in wage growth appears to be occurring even as evidence of a policy-related reversal in hiring seems practically non-existent.

But data released later on Friday suggested the bears are on their way home: the Institute for Supply Management’s services index slipped to 49.6—well below expectations—while the new-orders subindex dropped to 45.2 from 56.6 in the prior month. If history is any indication (it may not be), this would indicate that recessionary conditions are hitting the US economy’s most important sector.

The Canadian dollar remains well-supported after Friday’s jobs number blew past expectations. 104,000 jobs were added in December – well above the 5,000-position median Bloomberg forecast – with 84,500 landing in full-time work. Rather remarkably, 35,000 jobs were added in the construction sector, defying a slowdown in housing market activity. Odds on another quarter-point hike at the Bank of Canada meeting are flirting with the 80-percent threshold, but yields are down in sympathy with the US curve.

The Brazilian real opened slightly lower, but we suspect the longer-term bullish sentiment will remain relatively intact even after a January 6-style insurrection took place over the weekend. Yesterday, thousands of supporters of former president Jair Bolsonaro invaded the country’s Congress, Supreme Court and presidential offices to protest what they claim was a stolen election, but were unsuccessful in inciting a military intervention (read: coup), and riot police soon moved in to subdue the crowd.

There are no major data releases scheduled for today.

Thursday’s US consumer price index report might show that headline prices fell into deflationary territory in December, but a still-hot core measure should keep the Federal Reserve on track toward another rate hike at its February meeting. Global commodity prices have come under pressure as an unusually-warm winter intersects with a slowdown in China to lower demand forecasts, supply chains are returning to normal, American retailers have begun discounting inventories, and rate-sensitive areas of the economy have slowed. But cost pressures are still elevated within the less-volatile measures that the Fed prefers to use – if year-over-year core inflation fails to fall below 5.7 percent, odds on a half-percentage-point hike at the February meeting could jump once more.