While the unemployment rate dropped to 3.9%, the headline number came in well below the 425k jobs we were anticipating.  Labor force participation held steady at 61.9%.  This news follows a hawkish Fed minutes release on Wednesday that suggests we could see a hike in interest rates as soon as March.  Market response was pretty muted following the news, with the three major indices holding steadily near unchanged in the wake of the number, but they have since started to dip. 

The Fed minutes from the December’s meeting indicated that most Fed officials thought we were close to reaching or had already achieved full employment, which Powell has consistently stated was a prerequisite to rate hikes.  Seeing the unemployment rate dip below 4.0% can only help firm up their stance.  With inflation now being viewed as something that is here to stay rather than the retired “transitory,” the Fed would like to end its bond buying program and start to normalize interest rates.