Nonfarm Payrolls November 2017

November jobs came in totaling 228,000 this morning. While the headline number suggests a firming labor market, a rather tepid reading on hourly earnings keeps a lid on our holiday enthusiasm. Hourly wages tiptoed up a meager 0.2% in the month of November, representing a 2.5% year over year increase. Average hours worked were also slightly higher at 34.5 compared to 34.4 in October; the unemployment rate was unchanged month over month at 4.1%.

This solid but uninspiring payrolls report when coupled with some stronger than expected domestic economic readings and a deal between the UK and EU leaves us cautiously optimistic as we wrap up 2017. To be sure, this has been an interesting year to say the least, and we expect 2018 to be equally interesting for a number of reasons- more on that in the coming weeks. 

TWP maintains its view that one more interest rate hike is likely before yearend and with the Fed on tap next week we will be keeping a close eye on consensus and any divergences going into 2018. The great inflation debate is on! Of course, it will be interesting to see if the other choristers (i.e. the ECB, PBOC, and BOJ) continue on in the same line and verse or if there will be some surprises. We are certainly looking forward to it, but for the time being, our market outlook remains the same: neutral USD, neutral rates/ duration, and bullish equities.

Happy Holidays and best wishes from your partners at TWP.        

Market Outlook: Neutral USD, Neutral Rates, Bullish Equities