Most significantly, Ben Bernanke and company said “deterioration in the labor market is abating,” which traders took as validation of the boost to priced-in Fed rate hike expectations over recent weeks. The US central bank is widely expected to look at the jobless rate as the key gauge for timing a reversal of its ultra-loose monetary stance. A Credit Suisse gauge of the priced-in yield forecast now shows the markets are betting on 89 basis points in rate hikes over the coming year, up 37 basis points or 71% since the beginning of the month. The shift in expectations was set off by sharply better outcomes for November’s nonfarm payrolls and retail sales reports.
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