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

The December payrolls number was softer than expected; however, the unemployment rate dropped slightly to 4.4%. This suggests that the labor market is holding up, convincing analysts that the Fed won't rush to cut rates. Barclays has moved their Fed rate cut forecast from March and June to June and December, expecting a 25 bps cut in both months. Morgan Stanley also revised its cuts from January and April to June and September, while JP Morgan has abandoned its January cut forecasts entirely, hinting at potential hikes by Q3 2027. These shifts in predictions indicate that the Fed's balancing act between a softening labor market and inflation is still in play. Questions regarding political influences on the Fed's decisions remain, but for now, the market sentiment suggests that the Fed won't act quickly on rate cuts.