NFP React: Payroll Shocker, Wall Street eyes half-point March liftoff, Amazon impresses

US stocks traded mixed after a surprisingly strong employment report made some investors nervous the Fed will be forced to be much more aggressive with fighting inflation. The Nasdaq was boosted after yesterday’s flawless Amazon earnings report.  Amazon delivered strong eps and AWS revenue beats, reported a $12 billion gain from their bet on Rivian, and raised their annual Prime membership prices.  Investors care about Cloud growth and future profits and Amazon’s earnings report had all those boxes checked off.

The next couple of months should be very choppy for equity markets as Fed tightening certainty will clearly take a cue from how quickly supply chain issues improve.  The Fed clearly is rushing to fix their mistake in tackling inflation and that surging global bond yield environment will make it tough for risky assets.  Selling into rallies may not become the dominant theme, but it is hard to imagine investors will be aggressively bullish here.


Financial markets got stunned after a shockingly strong nonfarm payroll report.  Many on Wall Street were expecting a negative number, instead we saw robust hiring, higher wages and more Americans returned to the workforce. Treasury yields skyrocketed alongside the dollar following the impressive labor report that will fuel into the inflationary theme that is driving markets. With a couple hotter inflation reports coming before the March FOMC meeting, the base case is quickly becoming for the first-rate hike to be a half-point interest rate increase.

This employment report will not be shrugged off. The US economy gained 467,000 jobs in January, a strong beat of the 125,000 consensus estimate and a big surprise for many analysts expecting a negative print.  December payrolls also had a very robust revision from 199,000 to 510,000.  The labor force participation rate also improved from 61.9% to 62.2%, which is why the unemployment ticked higher to 4.0%.  If it weren’t for the massive revisions, the participation rate would have stayed at 61.9%, which would still be well below the pre-pandemic level of 63.4%.  What complicated this report was seasonal factors and that 6 million people were out of work due to COVID. The labor market is so tight that even a massive COVID surge can’t disrupt hiring.

Average hourly earnings were 5.7% higher in January compared with a year ago, which confirms the wage pressure companies are seeing.

The January nonfarm payroll report supports the argument that the Fed will do more to tackle inflation and that the yield curve will flatten.  The 2-year Treasury yield rose 9.8bps to 1.298%, while the 30-year Treasury yield rose 4.9bps to 2.200%.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.