John Hancock: Weekly Market Recap Week Ended February 2

Higher-for-longer outlook

The U.S. Federal Reserve kept interest rates unchanged at the highest level in more than two decades and Chair Jerome Powell said that the prospect of a rate cut as soon as March is “probably not the most likely case.” He indicated that a cut appears likely at some point in 2024 but added that the Fed first wants greater confidence that inflationary pressures will continue to ease.

Upside jobs surprise

High interest rates again appeared to do little to hold back the U.S. labor market, as January’s jobs gain of 353,000 was roughly double the number that most economists had been expecting. In addition, gains from the previous two months were revised upward by a total of 126,000 jobs and the unemployment rate stayed unchanged at 3.7%.

Yield volatility

The bond market went on a rough ride late in the week as the yield of the 10-year U.S. Treasury bond fell as low as 3.82% on Thursday before climbing back above the 4.00% threshold the next day. Friday’s surge to a closing yield of 4.03% followed a stronger-than-expected monthly jobs report, which helped fuel expectations of a further delay in potential interest-rate cuts.

Europe’s slump

The eurozone’s economy ended 2023 on a flat note, posting a 0.0% fourth-quarter GDP growth figure after contracting slightly in the previous quarter. The last time the continent recorded significant growth was in the third quarter of 2022, when the annual growth rate was 0.5%.

Source: https://wmr.jhinvestments.com/