Non-Farm Payrolls: 12-07-2007

To quickly recapitulate the press release:

• The unemployment rate remained unchanged at 4.7%
• Employment increased 94,000 to 138,467
• Hourly earnings rose $0.08 to $17.63
  

Judging from the economic calendar on CNN Money (please advise if there's a better calendar) and the reaction of S&P 500 futures, the unemployment rate - which was expected to increase - and employment were better than expectations.

However, average hourly earnings came in quite a bit above expectations (0.46% MOM versus an expected 0.30%). That doesn't bode well for inflation expectations...

Will today's stronger-than-expected employment situation change market expectations of Tuesday's Fed action? I'll update with the information from the Cleveland Fed after the market closes.

UPDATE:
Estimates of a 50 bps reduction in the Fed Funds Rate declined using either December of January options. Expectations of a 25 bps cut now stand near 60% and 70% for December and January options, respectively (in each case the remainder represents the probability of a 50 bps cut).