The US private sector accelerated its hiring to start the year with businesses of all sizes contributing to the cyclical momentum, according to payroll processing firm ADP. All 11 sectors ex-manufacturing drove the headline strength of 183,000, which surpassed the 150,000 median estimate as well as the 176,000 from December. The economically sensitive trade\/transportation\/utilities and leisure\/hospitality categories comprised more than half of the gain, boosting headcounts by 56,000 and 54,000. Education and health services and information were also sizeable supporters, raising rosters by 20,000 and 18,000. All other segments except for manufacturing, which lost 13,000, added 15,000 or less. Small (1-49 employees), medium (50-499 employees) and large firms expanded payrolls by 39,000, 92,000 and 69,000. Wage pressures, meanwhile, were bifurcated across job changers and job stayers, with the year-over-year (y\/y) changes in annual pay shifting from 4.6% and 6.9% to 4.7% and 6.8% during the period.<\/p>\n\n\n\n Economic activity decelerated in the services sectors last month, as survey respondents blamed unfavorable weather conditions and trade uncertainty for slower demand. The Institute for Supply Management\u2019s (ISM) Purchasing Managers\u2019 Index for Services came in at 52.8, beneath the median estimate of 54.3 and the 54 from December. Monthly scores for prices, business production and new orders decelerated to 60.4, 54.5 and 51.3, weighing on the headline. Countering some of the softening, however, were employment and new export orders, which accelerated to 52.3 and 52. The hiring figures confirm the cyclical buoyancy within the ADP report.<\/p>\n\n\n\n Risk-off sentiments were dominating Wall Street as investors clamored for gold bars and Treasurys until stocks reversed from red to green. The small-cap, rate-sensitive, Russell 2000 Index is leading the way; it\u2019s up 1.1% and the Nasdaq 100, S&P 500 and Dow Jones Industrial benchmarks have flipped from losses to gains and are now up 0.3%, 0.2% and 0.2%. Sectoral participation is positive with 9 out of 11 segments higher as communication services and consumer discretionary are lower by 1.4% and 0.8% whereas real estate, utilities and health care are piloting the bullish recovery; they\u2019re higher by 1.4%, 1.1% and 0.9%. Turning to fixed-income and currencies, the yield curve is shifting south in bull-flattening motion and the greenback is weakening as a result. The 2- and 10-year Treasury maturities are changing hands at 4.17% and 4.42%, 5 and 10 basis points (bps) lighter in today\u2019s trading. Furthermore, the greenback is depreciating relative to most of its major counterparts, including the euro, pound sterling, franc, yen and Aussie and Canadian tenders, which is contributing to the Dollar Index weakening by 52 bps. It is appreciating versus the Chinese yuan, however. Commodities are benefiting from the softer greenback, with gold, silver, copper and lumber higher by 1%, 0.9%, 0.8% and 0.1%, although crude oil is lower by 1.9%. WTI is trading at $71.31 per barrel on the back of a surge in crude inventories that together with an uptick in gasoline supplies arrived well ahead of expectations in this morning\u2019s weekly report form the US Energy Information Administration.<\/p>\n\n\n\n I don\u2019t think today\u2019s developments justify such a dramatic move at the long end of the curve despite the Treasury refunding announcement reflecting steady issuance levels for 2025. Both the ISM-Services and ADP-Employment reports reflected accelerating hiring conditions amidst continued cost pressures at points of sale and through worker compensation. These dynamics are more consistent with steady or climbing interest rates rather than lighter yields; however, geopolitical and trade uncertainty are clearly generating interest in fixed-income assets. Finally, I believe this stage of the economic cycle alongside the domestic political backdrop is supportive of stronger growth, upside risks to inflation and taller term premiums rather than the other way around.<\/p>\n\n\n\n![\"cyclical](\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/02\/Picture1-4.png\")
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<\/figure>\n\n\n\nInvestors Rush to Safety<\/strong><\/h2>\n\n\n\n
Overreaction at the Long End<\/strong><\/h2>\n\n\n\n
ForecastEx Weekly Pick<\/strong><\/h2>\n\n\n\n
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