NFP: What it means for the Federal Reserve - ING

James Knightley, chief international economist at ING, suggests that the recent recovery in equity markets, the ending of the government shutdown, and some cautious optimism on the outlook for US-China trade talks, now see around 10 basis points of policy tightening priced in for this year for the US Fed.

Key Quotes

“We think this still underestimates the probability of interest rate increases from the Federal Reserve.”

“Any slowdown in jobs growth this month is as much due to a lack of available workers as it is to a slowdown in hiring intentions after a bumper end to 2018.”

“With worker pay on the rise and employees feeling secure in their jobs, consumer spending will likely remain firm while adding to inflation pressures in the economy. As such, we continue to look for two more rate hikes this year, starting with a move in late 2Q.”