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Former Fed advisor on jobs: Donald Trump and Jerome Powell can ‘take another victory lap’

Scott Gamm
U.S. President Donald Trump looks on as Jerome Powell, his nominee to become chairman of the U.S. Federal Reserve, speaks at the White House in Washington, U.S., November 2, 2017. REUTERS/Carlos Barria

The November jobs report crushed expectations on Friday, sending the stock market surging.

“Jerome Powell and Donald Trump can take another victory lap,” said Danielle DiMartino Booth, a former Federal Reserve advisor and CEO of Quill Intelligence.

The economy added 266,000 jobs in November, according to a report released Friday by the Bureau of Labor Statistics. The prior two months of job gains were revised higher pushing the three month average of job adds to 205,000.

“In stark contrast to just about every other source of economic data, the jobs data insists the U.S. economy is strong, and that is all markets care about as it is the most visible and most quoted,” Booth said. “The reaction in the dollar and bond yields speaks volumes to how surprised markets were to this data.”

The U.S. Dollar Index rose by 0.34% Friday morning, making a more meaningful push above the 97-mark. The 10-year Treasury yield (^TNX), surged, crossing 1.8% as investors fled safe-haven assets in favor or risk assets. Bond yields and prices move in opposite directions. 

President Trump even tweeted “GREAT JOBS REPORT!” on Friday morning. 

As for Fed Chair Jerome Powell, he has steered a Federal Reserve that cut interest rates three times so far this year in an effort to reverse the hawkishness of Fed policy last year, which included four rate hikes, and to get ahead of any economic weakness sparked by the ongoing trade tensions between the U.S. and China. 

The Federal Reserve meets again next week, and most market participants aren’t expecting any changes to rates.

“Despite the strengthening trend, this [jobs report] will not change anything at the Fed aside from what officials say publicly,” Booth said.

Booth also highlights the following “anomalies” in Friday’s jobs report, which she thinks will garner attention from Fed officials. 

  • The discrepancy with the ADP data is highly unusual (ADP reported only 67,000 private sector job adds for the month of November).

  • The labor force participation rate fell. 

Scott Gamm is a reporter at Yahoo Finance. Follow him on Twitter @ScottGamm.

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