Traders Maintain Amount of Fed Easing Seen in 2020 After Jobs

(Bloomberg) -- Futures traders maintained the amount of easing they expect from the Federal Reserve this year after the U.S. jobs report showed employers hired at a stronger-than-expected pace in January.

January 2021 fed funds futures imply a rate of 1.255% at the end of 2020, having indicated 1.26% just before the release of the data. Assuming an effective fed funds rate of around 1.59%, the market is pricing in around 33.5 basis points of further easing for this year. It is fully pricing a quarter-point cut by October.

Payrolls increased by 225,000 after an upwardly revised 147,000 gain in December, according to a Labor Department data Friday that topped all estimates of economists. The jobless rate edged up to 3.6%, still near a half-century low, while average hourly earnings climbed 3.1% from a year earlier.

To contact the reporter on this story: Alexandra Harris in New York at aharris48@bloomberg.net

To contact the editor responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net

©2020 Bloomberg L.P.