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STIR: Dockworker Strike Yields Large Wage Increases Ahead Of Payrolls

STIR
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  • Fed Funds implied rates have continued to push higher overnight, primarily through European hours and we move closer to the nonfarm payrolls report (for which the Bloomberg whisper number has drifted higher again from yesterday to 151k).
  • Cumulative cuts from 4.83% effective: 34bp Nov, 66bp Dec, 95bp Jan and 151bp June.
  • Dockworkers overnight unexpectedly agreed to end a major strike along East and Gulf coasts after just three days. Work will restart today along with negotiations on a long-term agreement that will include a pay increase of ~62% over 6 years (although the market impact was initially limited, possibly by a previous offer of 50% being rejected).
  • Fed Chair Powell has previously said that “it seems unlikely that the labor market will be a source of elevated inflationary pressures anytime soon”. This settlement is a reminder of upside risks here though, both from the angle of passing through costs and the impact it can have on wage expectations elsewhere (but granted this sector has outsized union representation).
  • A characteristically dovish Goolsbee (’25 voter) spoke on local radio yesterday and is set for three separate appearances today. That leaves NY Fed’s Williams (voter) in focus in the off chance of more in-depth comments as part of his opening remarks at a jobs conference at 0900ET. 
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  • Fed Funds implied rates have continued to push higher overnight, primarily through European hours and we move closer to the nonfarm payrolls report (for which the Bloomberg whisper number has drifted higher again from yesterday to 151k).
  • Cumulative cuts from 4.83% effective: 34bp Nov, 66bp Dec, 95bp Jan and 151bp June.
  • Dockworkers overnight unexpectedly agreed to end a major strike along East and Gulf coasts after just three days. Work will restart today along with negotiations on a long-term agreement that will include a pay increase of ~62% over 6 years (although the market impact was initially limited, possibly by a previous offer of 50% being rejected).
  • Fed Chair Powell has previously said that “it seems unlikely that the labor market will be a source of elevated inflationary pressures anytime soon”. This settlement is a reminder of upside risks here though, both from the angle of passing through costs and the impact it can have on wage expectations elsewhere (but granted this sector has outsized union representation).
  • A characteristically dovish Goolsbee (’25 voter) spoke on local radio yesterday and is set for three separate appearances today. That leaves NY Fed’s Williams (voter) in focus in the off chance of more in-depth comments as part of his opening remarks at a jobs conference at 0900ET.