U.S. Labor Costs Rose Less than Expected as Fallout from Fed’s Tightening Cycle

U.S. equity benchmarks are trading 0.15–0.50% higher at the time of writing after wage growth data pointed to easing inflation ahead of the Federal Reserve's decision on interest rates tomorrow. The Fed will make its decision on rates on Wednesday, with investors betting on a 25-basis-point hike at the end of the its two-day meeting, and a terminal rate of 4.9% in June.

U.S. labor costs rose less than expected in Q4 2022 as wage growth slowed, as one of the unwanted side-effects of the central banks’ aggressive approach to curbing inflation.

The International Monetary Fund raised its 2023 global growth outlook a bit due to "surprisingly resilient" demand in the U.S. and Europe, an easing of energy costs and the reopening of China's economy after Beijing abandoned its strict Covid restrictions.

Meanwhile, a new Republican majority in the U.S. House of Representatives pushing for sharp spending cuts. A rapidly growing pile of debt - and a showdown that threatens to throw the global economy into turmoil.

European stocks slid lower in today’s trading, as investors digested the release of Q4 growth figures from the Eurozone, braced for central bank interest rate decisions this week, and examined a series of fresh corporate earnings. At 04:00 p.m. CET, the regional Stoxx 600 fell 0.51%, the German DAX index traded 0.32% lower, the British FTSE 100 dropped 0.50%, and the CAC 40 in France decreased by 0.25%.

China's economic activity swung back to growth in January and the euro zone avoided a recession in the final three months of 2022, data released today shows. But three years on, Britain is still waiting for a Brexit dividend.