Ok, so in case you missed it in the initial jobs post, earnings growth just tied a post-crisis record at 2.9% y/y:
Needless to say, that bodes well for a December Fed hike. Bill Gross agrees. “It’s a slam dunk,” he told Bloomberg television minutes after the report hit.
And the market concurs, as the implied odds of a hike by year-end rise to more than 75%, based on January 2018 fed fund futures. Also note that August was revised higher:
- Avg. hourly earnings 0.5% m/m, est. 0.3%, prior 0.2%
- Y/y 2.9%, prior 2.7% est. 2.6%
As a reminder, here’s what we said early this morning:
Still, it will be interesting to see the extent to which yields and the dollar react in a way that “confirms” a December hike or else materially reduces the odds — this is of course playing out against a background characterized by ambiguity around the next Fed chair and even more ambiguity around tax reform.
