Fed Chair Powell
Fed Chair Powell

The November jobs report showed there is still some sizzle left in the labour market, CIBC notes after today's release.

The data showed 199K jobs added, better than 180K. The unemployment rate also fell to 3.7% from 3.9% in a surprise.

Today’s report will raise some eyebrows in the FOMC and is a reminder that the labour market remains tight. But with inflation persistence less of a challenge, the Fed will remain patient. As inflation and expected inflation edge down, monetary policy will continue to become more restrictive without further tightening of nominal policy rates because real policy rates will slightly increase.

As for the implications, CIBC said the report strengthens their call for the Fed to hold rates throughout most of 2024.

A gap has opened between what economists are expecting and what markets are pricing. Fed funds futures market has a first cut fully priced in for May and 110 bps of cuts priced in next year. Notably though, that's down from 121 bps priced in before the data.