U.S. nonfarm payrolls increase: ‘I think equities are unattractive’

S&P 500 is slightly in the green this morning after the Bureau of Labour Statistics said payrolls increased more than expected in November.

U.S. job market remains tight

Nonfarm payrolls popped a whopping 199,000 on a seasonally adjusted basis last month versus 150,000 in October and 190,000 expected.  

Unemployment also declined in November to 3.7% while the Dow Jones estimate was for 3.9%. On CNBC’s “Squawk Box”, Matthew Rowe of Nomura Private Capital said:

Also on Friday, a closely followed University of Michigan survey showed inflation expectations for both one-year and five-year to have declined. S&P 500 is now up 12% versus its recent low.

Fed may not aggressively cut rates

The Bureau of Labour Statistics also reported a 0.4% increase in average hourly earnings for the month on Friday. Economists had forecast a 0.3% increase instead.

Nomura’s Rowe is somewhat dovish also because the markets are pricing in significant rate cuts in the coming year that the U.S. Federal Reserve may not deliver.

Fed chair Jerome Powell recently confirmed that it was “premature” to expect that the central bank will aggressively lower interest rates in 2024 as Invezz reported here.

Ashish Shah of Goldman Sachs Asset Management also told CNBC this morning that he sees the coming year to be one for the bond market.