We expect headline job gains accelerated to 80k in January. Lead indicators have improved broadly, and we expect some positive payback this month from negative weather effects and punitive seasonal adjustments in December. If our expectations are right about Jan NFP at 80k, the 3-month average of NFP growth moves to 62k. This will be highest since early 2025. We also point out that December NFP tends to be revised higher in recent years, which has the potential to push up the 3m average further. Lead indicators for employment growth have been broadly positive. Initial and continuing jobless claims both trended lower through the January NFP reference week. Service-sector PMIs have also demonstrated some improvement in employment growth & the weekly ADP private employment tracker has also continued to show job gains. In addition, the latest Beige Book upgrade its assessment on job growth. We expect the unemployment rate moved modestly lower in January, rounding down to 4.3%. Fundamentals for unemployment were mixed, but in our view, there is still room for negative payback after the large rise in temporary layoffs in November. 3. We expect average hourly earnings growth remained steady at 0.3% m-o-m, in line with the December reading and recent run-rate. The BLS will publish the final version of the 2025 NFP benchmark revisions along with the January report. We expect the final revision to be close to the preliminary estimate announced in September, reducing the pace of job gains by roughly 75k/month from April 2024-March 2025. The annual benchmark will also include revised seasonal factors and a new birth/death model. The January employment report typically incorporates new population estimates for the household survey, but this adjustment has been postponed until next month’s report. Summary: We expect Fed to remain on hold till May’26 when Powell leaves as Fed Chair. We continue to expect 2 cuts of 25 bps each in June & Sep as Warsh takes over Fed Chair. Employment situation is not weakening further & inflation readings are still elevated. With commodity prices being higher including crude, FOMC might wait for next few months to see full impact of tariff passthrough to prices. We are neutral on US long end yields for now. We expect 10yr UST yield to be between 4.20-4.40 levels in the short term. We expect DXY to strengthen now to 98 levels from the current 97 levels after it took a significant rebound from multi month support at 96 levels. On US equities we are moderately bullish and expecting 7015 levels. We have released the following long S&P recommendation on 8th Nov’25: https://macro-spectrum.com/trade-recommendation/buy-sp-500 Currently S&P is at 6939. At the time of recommendation, S&P was at 6729.
