Key Takeaways
- US Nonfarm Payrolls significantly exceeded expectations in January, rising by 130,000 against an estimated 65,000, while the unemployment rate fell to 4.3%. This robust jobs data has led to a slump in US Treasuries and shifted market expectations for a Federal Reserve rate cut to July from June.
- The FAA lifted the temporary airspace closure over El Paso, confirming no threat to commercial aviation after Mexican cartel drones breached US airspace, prompting Pentagon action. All flights are expected to resume as normal.
- BMW announced a recall of hundreds of thousands of cars globally due to a starter issue that could pose a fire risk.
- Kremlin officials will not attend the first Board of Peace meeting, according to TASS.
- France's Health Ministry reported three baby deaths and is investigating a potential causal link with infant formula, though none has been established yet.
US Jobs Report Bolsters Economy, Shifts Fed Expectations
The U.S. labor market demonstrated unexpected strength in January, with Nonfarm Payrolls surging by 130,000, significantly surpassing the estimated 65,000 and the previous month's 50,000 (revised from 48,000). This "blowout" jobs report, as described by Yared, also showed private jobs above expectations. The unemployment rate concurrently dipped to 4.3% from 4.4%, defying expectations for it to remain steady. Average hourly earnings also saw a robust increase of 0.4% month-over-month, exceeding the 0.3% estimate.
Despite the strong January figures, annual benchmark revisions for 2025 subtracted 862,000 jobs, slightly more than the estimated -825,000. The average monthly change in US payrolls for 2025 was revised down to +15,000 from +49,000. Furthermore, the two-month payroll net revision for January subtracted 17,000 jobs.
The stronger-than-expected jobs data immediately impacted financial markets, causing US Treasuries to slump across all maturities. Traders have now fully priced in a Federal Reserve rate cut by July, a delay from previous expectations of a June cut.
El Paso Airspace Reopens After Drone Incursion
Airspace over El Paso experienced a temporary closure today due to a security incident involving drones. U.S. Administration officials confirmed that Mexican cartel drones had breached US airspace, prompting the Pentagon to take action to disable them.
The FAA quickly announced that the temporary closure of airspace over El Paso has been lifted. The agency reassured the public that there is "no threat to commercial aviation" and that "all flights will resume as normal".
International Developments
In international news, Kremlin officials will not be attending the first Board of Peace meeting, as reported by TASS.
France's Health Ministry reported three baby deaths as of today. French authorities are investigating, but no causal link has yet been established between the deaths and infant formula. Separately, France's Foreign Minister announced plans to increase humanitarian visas for Iranians persecuted by Iranian authorities.
In Canada, building permits saw a month-over-month increase of 6.8% in December, exceeding the estimated 5.0% and a significant rebound from the previous -13.1% (revised to -13.2%).
Automaker BMW is recalling hundreds of thousands of cars globally. The recall is due to a starter issue that could potentially lead to a fire.
Finally, the UK Labour Party is reportedly considering a new "Help to Buy" scheme aimed at first-time homebuyers.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.