Job openings unexpectedly rose in December as hiring picked up, Labor Department data showed on Tuesday. After the data, the 10-year Treasury yield bounced higher off morning lows and the S&P 500 dipped as markets priced in lower odds of a March Federal Reserve rate cut.
Job Openings, Hires, Quits
The Bureau of Labor Statistics said that employers posted 9.026 million job openings in December vs. expectations of 8.7 million. November openings were revised up to 8.925 million from 8.790 million.
Hiring also picked up even as November data was revised upward. Employers filled 5.621 million jobs in December, up from November's 5.554 million. The BLS initially reported 5.465 million hires last month.
Although job openings and hiring firmed up, another labor market indicator closely watched by economists offered a more encouraging message. The quits rate held at 2.2% overall and eased to 2.4% in the private sector. Both have now undercut their level leading up to the pandemic, which suggests wage pressures should continue to moderate.
Fed Rate Cut Odds
After the Job Openings and Labor Turnover Survey data, markets were pricing in just 38% odds of a Federal Reserve rate cut at the March 20 meeting, down from 47% on Monday. Markets now see 84% odds of a rate cut by the May 1 Fed meeting, down from 88% yesterday.
Several Fed policymakers have suggested they see little urgency to cut rates. Even though inflation has been rapidly falling to the Fed's 2% target, the economy has been growing faster than the Fed expected, which isn't conducive for rapid rate cuts.
January Jobs Report
Wall Street expects Friday's jobs report to show that employers added 170,000 payroll positions, including 142,000 in the private sector. Over the past three months employers have added an average of 165,000 jobs per month, of which 115,000 were in the private sector.
The firmer December JOLTS data could be a sign that the gradual slowing of job gains may have flattened out or even reversed. Yet it makes sense to take this data with a big grain of salt because the survey response reflects a small fraction of employers covered by the monthly employment report.
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S&P 500, 10-Year Treasury Yield
The S&P 500 dipped 0.1% in Tuesday morning stock market action, following Monday's 0.8% gain to a new closing high.
The S&P 500 rally came after the Treasury Department reduced its borrowing estimate for the first quarter. The moderation in Treasury issuance alleviated concern that high fiscal deficits will create more Treasury supply than investors want, pushing up government bond yields.
The 10-year Treasury yield rose to 4.09% on Tuesday, up from around 4.04% just ahead of the JOLTS release.
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