What's going on?

Ever hear the one about the Friday data release that showed the US labor market adding more jobs than expected in January? I should hope not: you have work to be getting on with.

What does this mean?

US employers wasted no time in hiring at the start of 2020, with Friday�s data showing 225,000 jobs added in January � around 40% more than forecast. There were gains across the board, but they were particularly strong in services like education, healthcare, hospitality, and transportation. And while manufacturers cut jobs, warm weather helped the construction sector add the most in a year.

Friday�s data had other pockets of good news too. Last December�s unusually weak job gains were revised higher, while wages increased 3.1% in January from a year earlier � also beating forecasts and improving on the worrying sub-3% stat from last month.

Why should I care?

The bigger picture: To cut or not to cut.
Friday�s strong labor report seems to endorse the Federal Reserve�s (the Fed�s) view that the US economy � which is now expanding for the 11th year in a row � is doing just fine. It might also underscore the central bank�s decision not to cut interest rates after having done so three times last year. That might explain why investors essentially shrugged when the Fed kept interest rates flat at its meeting last week. Now, those investors are looking at the same hot-button issues the Fed is using to make its next rate decision: trade wars, business investment, and global economic growth.

For markets: Optimism wars.
There�s no doubting the level of optimism sweeping investors lately, with US stocks hitting a record high � again � last week. But there�s also no doubting the US bond market-shaped elephant in the room. The yield on ultra-safe 10-year US government bonds is flirting with record lows, which implies bond investors might disagree with their equity cousins� optimism re. the overall health of the economy (tweet this). Only time will tell who�s right�