Monetary Policy & Inflation | US
October NFP Support Faster Taper Announcement at Dec. FOMC Meeting
- By Dominique Dwor-Frecaut
- 4 minutes read
Summary
• NFP was higher than expected but participation did not increase though it is in line with the still elevated unemployment.
• Nominal wage growth was in line with expectation but real wages remain below the level of June 2020 and well below productivity.
• Without an increase in participation and assuming the past few months pace of job gains continues, US unemployment could fall to 4%, the FOMC estimate of U*, by early 2022
• Because the Fed will likely hike soon after reaching full employment and because the Fed wants to taper before hiking, Oct. fast employment and nominal wage growth with flat participation suggest a faster taper announcement at the Dec. FOMC meeting.
Market Implications
• Pay the short end of the curve
Summary
• NFP was higher than expected but participation did not increase though it is in line with the still elevated unemployment.
• Nominal wage growth was in line with expectation but real wages remain below the level of June 2020 and well below productivity.
• Without an increase in participation and assuming the past few months pace of job gains continues, US unemployment could fall to 4%, the FOMC estimate of U*, by early 2022
• Because the Fed will likely hike soon after reaching full employment and because the Fed wants to taper before hiking, Oct. fast employment and nominal wage growth with flat participation suggest a faster taper announcement at the Dec. FOMC meeting.
Market Implications
• Pay the short end of the curve
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