Traders bet Fed won't raise rates further as job market cools

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A key gauge of labor market tightness that Federal Reserve Chair Jerome Powell has cited throughout the central bank's aggressive interest-rate hike campaign dropped to its lowest level since late 2021, a sign that a long-awaited cooling is underway and easing concerns borrowing costs will have to move much higher to bring down inflation.

Following the release of the monthly Job Openings and Labor Turnover Survey, or JOLTS report, investors upped their bets to a roughly 60% probability of no move following the May 2 to 3 meeting, compared to about a 43% chance the day before, based on pricing of interest-rate futures.

The ratio of job openings to job seekers fell to 1.67 on the last day of February from about 1.9, the lowest level since November 2021, a metric Powell and his fellow policymakers have been keenly following as they bid to sap the wind out of the labor market to bring inflation back to their 2% target rate without causing a recession., a measure of labor demand, also fell to its lowest level since May 2021 and data for January was revised lower to show 10.

Welcome relief on the job market front follows a key report last week that showed while inflation ebbed in February, it remained high enough to possibly compel the Fed to raise interest rates one more time this year. At their March policy meeting, most Fed policymakers signaled they expected to need to raise rates one more time, to 5.1%, and not to cut them until 2024.

 

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Why is the Federal Reserve still around?

Powell is not going to see it that way . . . .

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