November Jobs Report Outruns Expectations, Unemployment Drops, Jeopardizing Rate Cut Bets
Portfolio Pulse from Piero Cingari
The November jobs report showed stronger-than-expected employment growth with non-farm payrolls increasing by 199,000, surpassing the expected 180,000. The unemployment rate also dropped to 3.7%, and average hourly earnings grew by 0.4% month-over-month. These indicators suggest a robust labor market, which could affect the Federal Reserve's interest rate decisions, potentially reducing the likelihood of rate cuts in 2024. Following the report, the U.S. dollar, as tracked by UUP, rallied, while Nasdaq 100 futures fell, and QQQ closed higher the previous day.
December 08, 2023 | 1:39 pm
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POSITIVE IMPACT
The Invesco DB USD Index Bullish Fund ETF (UUP) rallied following the release of the robust November jobs report, reflecting market concerns over the Fed's ability to cut rates.
The positive jobs report suggests a strong economy, which typically leads to a stronger dollar as it decreases the likelihood of the Fed implementing rate cuts. UUP, which tracks the U.S. dollar, rallied as a result, indicating a direct correlation between the jobs data and the ETF's performance.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The Invesco QQQ Trust (QQQ) may face short-term pressure as equity futures, including the Nasdaq 100, fell ahead of the market opening after the jobs report, which could dampen expectations for rate cuts.
The stronger-than-expected jobs report could lead to a reassessment of the likelihood of rate cuts, which has been a key driver of the recent tech rally. As QQQ tracks technology stocks, the ETF could see short-term negative impact due to the potential shift in monetary policy expectations.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70