The solid average hourly earnings climbed 2.9% y/y, the best since mid-2009 due to tight labour market conditions and this opens the door for the Fed to become more aggressive. Added with the non-farm payrolls which grew 200K in January and the 4.1% unemployment rate, it supports our view of 2018’s first rate hike in March. We are looking at 3 rate hikes in 2018, with the next in June and the last in 4Q2018.

• Non-farm payrolls grew by 200K in January and the unemployment rate was 4.1%, while wages saw their biggest jump with average hourly earnings up 2.9%y/y, the best since mid-2009 due to tight labour market conditions.

• We view positively the overall labour data. We are looking more closely at the wage numbers which have been elusive compared to a more solid job data.

• We feel the latest labour data opens the door wider for the Fed to get more aggressive with interest rate hikes. We reiterate our three-rate hike view with the first hike in March by 25bps and the next in June with the final hike in 4Q2018.

Source: AmInvest Research - 5 Feb 2018