Fed rate cut calls get pushed back after the US jobs report on Friday

The December payroll numbers indicated some softness, yet the unemployment rate ticked up slightly to 4.4%. This resilience in the labor market suggests to some analysts that the Fed does not need to rush to cut rates anytime soon. Barclays revised its Fed rate cut forecasts to June and December, expecting a 25 bps cut in each month. Similarly, Morgan Stanley has shifted its rate cut forecasts from January and April to June and September. JP Morgan has even retracted its January cut expectations and anticipates no rate cuts through 2026, instead hinting at a potential hike by Q3 2027. Overall, these adjustments indicate the narrative surrounding the Fed's monetary policy may be slowly evolving, although the market currently believes further rate cuts are not imminent.