In a surprising turn the U.S. economy has outperformed expectations by adding 216,000 jobs in December 2023, surpassing economists’ predictions of 170,000 and exceeding the revised figure of 173,000 from November, with the data supporting the market’s anticipation of interest rate cuts.

According to data from the Bureau of Labor Statistics, the unemployment rate in the country held firm at 3.7%, defying forecasts that predicted an increase to 3.8%. The data was being closely watched by investors for signs on whether the Federal Reserve will move to cut interest rates in the near feature to achieve its coveted soft landing, where inflation retreats to 2% without a recession in the mix.

The data also shows that Wages, which reflect inflation and workers’ bargaining power in the job market, rose by 0.4% monthly and 4.1% yearly, above the 0.3% monthly and 3.9% yearly increase that economists had predicted. The percentage of people who were working or looking for work, however, fell from 62.8% to 62.5%, and the average number of hours worked per week decreased slightly from 34.4 to 34.3.

Reacting to the data Bitcoin’s price dropped lightly, as excitement surrounding the potential approval of a spot Bitcoin exchange-traded fund (ETF) in the United States has been helping the cryptocurrency surge.

Equities markets have seen a number of losing sessions so far this year while Treasury yields have started rising again as investors look for safer alternatives.

The CME FedWatch Tool shows that the U.S. Federal Reserve is expected to lower its interest rate by March, with a 65% probability. By the end of the year, the markets expect the rate to drop by 1.25% or more, putting an 80% chance on that happening.

Featured image via Unsplash.