Market Digest: Jobs + Tariffs = a Wild Friday Roller‑Coaster
What Went Down
Stocks dipped, Treasury prices popped back from the floor, and the dollar felt a nice high‑five thanks to fresh tariff headlines that stole the spotlight from last week’s solid January jobs report. The market’s mood swung from “meh” to “whoa!” in a matter of minutes.
January Jobs – Still a Lucky Break
- Nonfarm payrolls jumped +143 k – close to my 145 k guess and comfortably inside the forecast range.
- When we add the earlier +100 k revision, the 3‑month average climbing to +237 k, the highest in almost two years.
- Unemployment slid to 4.0% while participation rose to 62.6% – more folks working and more folks looking for work.
- Earnings bumped up 0.5% MoM, likely an artifact of shorter workweeks due to those California wildfires.
All that said, no major labor‑market weakness popped up, so the Fed’s “park it until the next check” seems probable. That pause might stretch deeper into the first half of the year before another 25‑bp rate cut appears in September.
Tariffs: The Unexpected Twist
On Friday, the White House hinted President Trump might roll out reciprocal tariffs as early as this week. If the U.S. follows suit (doubling or tripling specific duties), the market reacted like a jitterbug on hot coffee: stocks fell, Treasuries popped back from the front‑end, and the dollar leapt higher—thanks in part to safe‑haven demand.
Trade wars are a zero‑sum game, but the U.S. economy is on the “longer‑lasting, more resilient” side. The market’s sudden “no‑go” tone reflects how risky it feels to hold big positions when tariffs can change the game overnight.
My Take (Hope, Humor, and a Few Numbers)
- USD – I stay bullish. The dollar is the “best of a bad bunch” in G10 FX, and hawkish Fed stances and safe‑haven jitters give it extra lift. Still, a DXY >110 feels like chasing a wild goose.
- Gold – Stick with it. The metal’s momentum is on a “when” basis, with a $3,000/oz test looming but not yet there.
- Long‑term Treasuries – I’d take the 10‑year at 4.50%, but watch out for inflation expectations loosening – it could cause a big sell‑off.
- Equities – The S&P 500 has earned a tidy +16.4% Y/Y, the best quarter in three years. Drop‑in earnings rhythm and no major events apart from Nvidia on Feb. 26 suggest a steady upward tilt, tariff news permitting.
Looking Ahead
Data this week is pretty light: no major releases until the US CPI and retail sales. Congress will hear two days of Chair Powell testimony, which could add some nuance. Meanwhile, the UK’s Thursday GDP will likely paint a “stagflation” story that keeps me on a hands‑off stance with the pound.
US Treasury auctions and a slower pace of earnings releases keep the market moving, but overall it’s a “wait‑and‑see” phase, with a hint of optimism on the sidelines.
