What did the labor market data present to the markets, and will the Federal Reserve begin interest rate cuts?

The U.S. employment data has brought a new surprise to the markets.

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unemployment rate

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The monthly employment report from the U.S. Bureau of Labor Statistics revealed a faster pace of job growth in February than expected,
surpassing the previous reading that was revised downward.
Additionally, the unemployment rate increased, surpassing expectations and the previous reading,
while the average hourly wages rose annually and monthly, but below expectations and the previous reading.

The U.S. private sector added 275,000 jobs in February, exceeding experts’ expectations of 198,000,
and the previous reading was 353,000, but it was revised downward to 229,000.
In the non-farm private sector, 223,000 jobs were added in February, compared to the expected 160,000,
and the previous reading was revised downward from 317,000 to 177,000.

unemployment rate

On the other hand, the U.S. unemployment rate unexpectedly rose to 3.9% in February,
while experts had anticipated a rate of only 3.7%, as seen in the previous reading.
The monthly average hourly wage increased by 0.1% in February, lower than the previous reading of 0.6%,
and it was revised downward to 0.5%, while expectations were for a 0.2% increase.

On an annual basis, the average hourly wages recorded a 4.3% increase, slightly below the experts’ expected 4.4%,
with the previous reading at 4.4% after being revised downward from 4.5%.

The markets reacted significantly to the released data, with gold strengthening its gains to close last week’s trading at $2179 per ounce.
Meanwhile, the dollar index deepened its losses, closing at 102.7, and the yield on the benchmark 10-year U.S. Treasury bonds fell to 4.07%.

The significance of these data lies in the Federal Reserve’s reliance on them to gauge the activity level of the U.S. economy, alongside inflation data.
In its upcoming meeting, the Fed may provide hints and signals about the initiation of monetary stimulus and interest rate cuts.
Following satisfactory inflation data for the monetary policy committee and the disparities revealed by the labor market data,
expectations have risen for the Fed to start the interest rate reduction process in June, reaching 57.4% according to the Fedwatch tool.”

What did the labor market data present to the markets

What did the labor market data present to the markets

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