ORLANDO, Florida, Feb 11 - Wall Street wobbled on Wednesday and U.S. Treasury yields edged higher after government data showed stronger-than-expected payroll gains for January, even as Japan's yen extended its post-election rally for a third consecutive session.
In a separate note, I examine a longer-running structural trend: U.S. workers' share of GDP has fallen to the lowest level on record. The theoretical case for a productivity-driven reversal exists, but the practical likelihood appears low based on the evidence discussed below.
If you have time for background reading, here are a few articles I recommend to help make sense of what moved markets today:
- 1. U.S. job growth accelerates in January, unemployment rate falls to 4.3%
- 2. Software selloff is disrupting some M&A and IPO deals, U.S. bankers say
- 3. Euro and yuan global ambitions hasten the dollar drop - Mike Dolan
- 4. China makes small dent in deflation battle as supply-demand imbalance persists
- 5. EXCLUSIVE - CME looks into launching first ever rare earth futures contract, sources say
Markets at a glance
- Stocks: The three major U.S. indices were little-changed. Outside the U.S., the UK FTSE 100, Europe, Brazil, MSCI Asia ex-Japan and MSCI World all hit record highs.
- Sectors/Shares: U.S. energy led gains at +2.6%, consumer staples were up 1.4%, while communications services fell 1.3% and financials declined 1.2%. Individual movers included Caterpillar +4% and IBM -6.5%.
- FX: The dollar rose on balance, but not against a surging yen or the Australian dollar. Bitcoin slid about 2% and was trading below $68,000.
- Bonds: U.S. yields jumped as much as 6 basis points at the short end of the curve and the yield curve bear-flattened. The 10-year auction showed softer demand.
- Commodities/Metals: Oil gained about 2%, gold rose roughly 2%, silver was up 4%, and Comex copper climbed 1%.
Today's talking points
Payrolls - signs of stabilization
Delayed January employment figures released Wednesday showed the U.S. economy added 130,000 jobs, nearly double the consensus expectation, and the unemployment rate eased to 4.3%. Average earnings growth came in at 3.7%, also stronger than anticipated. Setting aside annual revisions and questions around a contracting labor supply, these headline figures point to a labor market that appears to be stabilizing. That in turn supports the view that the Federal Reserve can remain on pause for a longer period, consistent with recent comments from Chair Jerome Powell.
The 'clueless' debate
Political commentary aside, the data lend support to Fed prudence and suggest that criticism calling policymakers "clueless" may be overstated if one gauges performance by the recent trajectory of employment and wages.
It’s reigning yen
Japan's currency extended its post-election rally for a third straight day, rising by about 1% on the session and putting the yen on track for a roughly 3% weekly gain - its best week since November 2024. Notably, the yen strengthened even as the dollar was appreciating more broadly. Market participants cited the yen's immediate tests at 152 per dollar and then 148 per dollar, the latter level marking the currency's position prior to Prime Minister Sanae Takaichi's victory in the LDP leadership contest. Reaching those levels would indicate that much of the political risk premium has been priced out.
AI - transformative, uneven, volatile
Artificial intelligence continues to dominate equity market discourse. There is broad agreement on the direction of change, but wide uncertainty about the pace and ultimate economic impact. A Morgan Stanley report cited this week highlights several points: upward earnings revisions for AI adopters have outpaced those for AI-disrupted companies by about 2x; near-term AI-driven benefits are expected to be much more pronounced in cost efficiency than in revenue growth; and AI adoption is anticipated to benefit 49% of North American stocks covered, 37% in Asia, and 43% in Europe. The market is still in a relatively early phase of the AI cycle, which explains ongoing divergence, dispersion, and increased volatility across sectors.
What could move markets next?
- Japan wholesale inflation (January)
- Japan corporate earnings, including Nissan, Rakuten, SoftBank
- India inflation (January)
- ECB board members Piero Cipollone, Pedro Machado and Philip Lane speaking at separate events
- UK GDP preliminary Q4 data
- UK trade and industrial production (December)
- U.S. weekly jobless claims
- U.S. Treasury auction of $25 billion of 30-year bonds
- Global corporate earnings including Applied Materials, Unilever, Anheuser-Busch InBev, British American Tobacco, Airbnb
- U.S. Federal Reserve officials scheduled to speak include Governor Stephen Miran (after the market close)
Conclusion
Wednesday's data reinforced the narrative of a resilient U.S. labor market while underscoring pockets of strength and stress across asset classes. The yen's strong run after Japan's leadership contest adds another source of volatility for currency and cross-border equity strategies, and AI continues to be a key differentiator for earnings trajectories across regions. Market participants will be watching upcoming economic releases and corporate results for confirmation that the trends observed on Wednesday have further legs.