Employment Indicators Are Optimistic

[In January, S&P PMI]
Employment Indicators Are Optimistic
Optimism for next year has led to higher hiring. Employment grew at the fastest pace in two and a half years in January, the second straight month after four months of job losses. While the improvement was fueled by a surge in employment in the services sector, with jobs added at the fastest pace in 30 months, manufacturing wage growth also hit a six-month high. In the latter case, however, it maintained a modest increase, reflecting ongoing cost problems for producers stemming from falling sales. A wider range of companies continued to report ongoing problems related to lower employee availability.

the price of water
Inflationary pressures, meanwhile, intensified in January. Both input costs and average selling prices rose at their fastest pace in four months, with inflation in the latter rising for the second straight month.
Factory input prices rose at their steepest pace since August last year, which is typically tied to supplier-led increases in raw material prices. Cost growth at service providers was also back on the rise after hitting a 10-month low in December, and rose at its fastest pace in three months on higher labor costs and higher material prices.
The cost increase was passed on to customers, with average service charges rising at the fastest pace since September. More significant gains were reported for products with inflation at a 10-month high.

* So far, let's say it's okay. It's right after Trump's speech yesterday. As Trump said, U.S. manufacturing is rebounding, and inflation is not going to slow the economy down, but it's going to keep it down by lowering the price of crude oil. In principle, the Fed's goal is headline inflation at 2%, so Trump's logic is that we just need to keep energy prices down.

The interesting part is that long-term bond rates fall?
If employment is good and inflation rises, long-term bond rates should rise significantly, and it seems that they appreciate the slowdown in the service industry... Let's wait and see.