Yesterday NFP downward revisions of 818k show that the employment data in FY24 was solid, if not strong. The revisions were backward-looking and the size of revisions was not surprisingly big relative to expectations. Also, the QCEW has tended to be revised upwards in recent years. We believe that the actual reduction was to the tune of 250-300k, app 25k per month. This implies that actual NFP monthly average was app 220k rather than the initially reported 242k but definitely higher than the 174k implied by the revisions. Hence to us, it doesn’t look recessionary. We expect Fed to cut rates by 25 bps each at it’s next 3 meetings as it tries to dial down the restrictive nature of the current monetary policy. But beyond the first 100-125 bps cut in next 6 months, we don’t have much confidence in the current market pricing of 220 bps of cuts by end CY25.
