An estimate that the most recent ADP payrolls would print at only 192,000 jobs was surprised by the real result of 257,000 jobs added to the economy in December, as compared with November’s 211,000. The positive results increase the expectation that forecasts for upcoming nonfarm payrolls will be adjusted upward, although the two are not highly correlated, and illustrate that the economy is handling the new interest rate heartily. Fears that newly introduced policy would immediately crash fundamental statistics seem to be unfounded amidst these and other results, which point toward sustained gains in jobs related metrics heading further into 2016. Soon, NFP results will be released as well in the United States, with current estimates of 200,000 jobs added for December and before any adjustment due to the excellent ADP report.
Alongside the steadily increasing jobs and decreasing unemployment figures, a higher interest rate reduces the incentive for companies to borrow and fund stock buybacks. This makes investments in business cornerstones more worthwhile than before, which could help sustain upward momentum for the economy on the back of healthy industry. Trends in the dollar have now abated because of the news, continuing to strengthen versus major currencies toward multi-year highs. The event also spurred a rebound in the dollar and yen relationship, with USD/JPY retreating during most of the week’s sessions and the yen carry-trade looking ready to reverse. Equities may likely be affected by the Bank of Japan’s unwillingness to expand easing measures, concurrently unwinding the carry trade further, though gold is benefiting from the latest action.