The SP 500 index is in negative territory this Friday after the jobs numbers for December indicated that there is now potential for rate hikes by the Fed in 2022.
The US economy added 199K public sector jobs (426K consensus), with the unemployment rate falling from 4.2% to 3.9% (4.1% consensus). Average hourly earnings rose from 0.4% (revised upwards) in November 2021 to 0.6% in December 2021, pointing to the fact that as more Americans walk off their jobs, companies are paying more to attract the skilled ones still in the workforce.
The combination of a reduced unemployment rate and wage inflation has raised bets of at least three rate hikes in 2022, with the first coming as early as March 2022. San Francisco Fed President Mary Daly said in a panel discussion at the American Economic Association’s annual meeting that the Fed was now at a point where it “definitely need to adjust policy”.