Episode summary
US Payrolls Rose By Less Than Forecast in December
Bloomberg Surveillance
· · Guests: Kristina Campmany, Betsey Stevenson
Summary
The guest reads the December payrolls report as another sign that the labor market is weakening, with the market likely to focus more on the unemployment rate than the headline job gain. She says the data reinforces a view that the Federal Reserve may stay in a patient, wait-and-see mode, and that the bar for any renewed hiking is very high. She also notes that markets are not pricing much Fed action until a new chair arrives in June.
From an investing standpoint, she argues that fixed income still offers opportunity even after a strong 2025. Her case is that investors should look beyond the U.S. and consider global fixed income, with value in the front end, some roll-down opportunity, and a potentially steeper curve. She says the long end matters more because of fiscal dynamics, including higher defense spending and policy goals tied to cheaper oil and lower mortgage rates.
On regional allocation, she says the global story remains intact and that investors are too negative on Europe. While she is not enthusiastic about the entire euro area on a broad basis, she thinks there are still opportunities in continental Europe and in foreign exchange, though proof will be needed before sentiment improves.
Key takeaways
- The guest says the payroll report points to a weakening labor market, but not one that is producing a surge in unemployment.
- The guest expects the Fed to remain on hold for now, with the market not pricing much action until a new chair arrives in June.
- The guest still sees opportunity in fixed income, especially in global markets rather than just the U.S.
- The guest thinks the front end of the curve has value and that curve steepening could create roll-down opportunities.
- The guest says investors are too negative on Europe and that there are still opportunities in continental European rates and FX.
Notable quotes
“we may be back to a Fed sitting on their hands mode and trying to decipher through the data”
“I think the Fed will probably be most focused and comforted by the unemployment rate”
“there's still absolutely an opportunity in fixed income”
“the front end offers value right into use”
“there is growth in the US and there are positive dynamics here, but the strong U.S. is good for the rest of the world, too”
How the episode opens
I dropped all my things because I was so excited to log into the terminal and see what the data was. You can come comment, but I think I think we may be back to a Fed sitting on their hands mode and trying to decipher through the data. And again, we're still like, these are all noisy numbers.
You're like, oh, great headlines, 50. Well, revisions, it's -76, but the unemployment rate better. And I think the Fed will probably be most focused and comforted by the unemployment rate.
And the market's not really pricing much for the Fed really until we get the new chair in June. So I think that that that kind of remains our base case for the Fed here. So 2025 for the bond investors, a really good year.
The AG was up 7%, something along those lines in 2026. Am I just clipping coupons? Is that how I should think about fixed income?
Look, I think that there's still absolutely an opportunity in fixed income. I think the same pounding the table that we've had for the last year that there is, especially in this environment, an opportunity for global fixed income. When you take a step back.
And that doesn't mean not the U.S., it means including the rest of the world, which I think investors typically do not do. But I think it's about I think curves should probably still steepen, but there's still some that gives you roll down opportunity and there's value in the front end. And I think thinking about the long end of the market, we have to think about all these six what back to the questions that we had at the beginning of last year.
What are the policy and the administration's policy objectives going into midterms?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- us payrolls
- labor market cooling
- fed rate cuts
- unemployment rate
- hiring outlook
Companies and tickers mentioned
- IVZ
- Invesco
Watch the episode
Watch “US Payrolls Rose By Less Than Forecast in December” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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