US: Trump To Deliver Remarks At Business Roundtable Event Shortly

• Starting from a historical levels perspective, the benchmark revision to the outright number of payrolled employees was the most negative since 2009 but it wasn’t as bad as feared. The -598k revision left the non-seasonally adjusted level of payrolls in March 2024 0.4% lower than before Friday’s release but compared with -818k from the preliminary estimate released back in August and recent estimates we had seen between -670k to -700k based on latest QCEW data.
• As for more recent trends, the 143k seasonally adjusted increase in nonfarm payrolls disappointed consensus of 175k but it was more than offset by a strong two-month upward revision of 100k. What’s more, these upward revisions were on figures already starting from a strong base, and we see the latest three-month trend standing at 237k as the more important takeaway than the latest pullback in January.
• The realization of this recent trend strength was notable as there had been a risk that the annual revisions to seasonal adjustment factors could have lent on some of this strength. These revisions did indeed see a much less favorable factor in December (biasing seasonally adjusted payrolls growth lower on the month) but new information more than offset this considering there was a 51k upward revision for December alone.
• Turning to the household survey, it was clearly stronger than expected at 4.01% (cons 4.1) to continue a pullback from cycle highs of 4.23% in November with its lowest since May 2024. We have some questions about the calculations adjusting for the population control but it doesn’t notably detract from a trend that sees the u/e rate moving away from the 4.3% that the median FOMC member forecast for 4Q25.
• Rounding out the major variables from the report, average hourly earnings growth was far stronger than expected at 0.48% M/M (cons 0.3). However, this surprise acceleration coincided with a notable further decline in average weekly hours, to 34.1 from a downward revised 34.2 in Dec, leaving it at a joint low with only one-month in the pandemic and having last been seen in mid-2010. It’s all the more notable because the BLS categorically said Southern California wildfires and cold weather had no discernible effect on employment or hours worked.

• The January payrolls report saw a modest miss for nonfarm payrolls but it was more than offset by a robust two-month net revision along with a smaller than expected benchmark revision.
• Further, the unemployment rate again surprised lower at 4.0% for its lowest since May 2024 in a further step away from the 4.3% the median FOMC member forecast for 4Q25 in the December SEP.
• Wage growth meanwhile also surprisingly accelerated but against a notable caveat of average weekly hours sliding to lows last seen in the depths of the pandemic and mid-2010 (that’s despite the BLS saying adverse weather played no impact).
• The combination saw Fed rate cut expectations trimmed again to 37bp of cuts for 2025 vs 43bp pre-data, although it was clearly less overtly hawkish than the December payrolls report which briefly saw 25bp of cuts priced for the year in subsequent Asia trade. 

• See a more detailed take in part two. 

• RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 1: 95.665/851 - High Feb 5 / High Dec 11 
• PRICE: 95.575 @ 16:37 GMT Feb 7
• SUP 1: 95.275 - Low Nov 14  (cont) and a key support 
• SUP 2: 94.477 - 1.000 proj of the Dec 11 - 23 - 31 price swing
• SUP 3: 94.495 - 1.0% 10-dma envelope

The Aussie 10-yr futures contract continues to trade below the Dec 11 high of 95.851. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish theme. For bulls, a confirmed reversal and a breach of 95.851, the Dec 11 high, would instead reinstate a bull cycle and refocus attention on resistance at 96.207, a Fibonacci retracement point.