The slightly bigger-than-expected 216,000 gain in non-farm payrolls (consensus estimate was 170,000) in December coupled with a second consecutive 0.4% m/m gain in average hourly earnings means that this labour market report will trigger a further paring back of expectations for a March rate cut. At this stage, however, all that really matters for the Fed is the CPI and PPI data, due next week, which we expect to be more supportive of early action from the Fed.
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