The US jobs report has the market now pricing in a greater than 50% chance that the Fed will hike five times in 2022.
Expectations for March and May hike are now at 100%. There is and 82% chance of a June hike and a 56% chance of a July and November hike.
The Fed funds rate is now targeted at 0.25%. Five hikes would take the train up to 1.5% by the end of the year.
The 2 year yield is now trading at 1.300% and at the highest level since February 2020. Looking at the weekly chart, the yield is now above the 38.2% of the move down from the 2019 high at 1.202% and the 200 week MA at 1.217%. The 50% midpoint of the move down from 2019 comes in at 1.541%. If rates move up to 1.5% by year end, that target is certainly doable.
Within the jobs report today, the wages continued to increase with a gain of 0.7%. That is a 5.7% increase for the year.
Despite the rotations for higher rates, the US stocks are mostly higher with the S&P up 16.1 points or 0.37%. The NASDAQ index is up 170 points or 1.22%. The markets today are focused on the expectations at the economy will remain strong and pushing up earnings, and taking their eye off of the inflation implications for the time being at least.
Amazon announced a 16% increase in their Prime subscription fees due to higher labor and transportation costs.
