Fed Watch – 2/13/2026

with lauren saidel-baker

Stronger Jobs Report, Fed Pause Likely, and Global Concerns Rise

This week on Fed Watch, ITR Economist and Speaker Lauren Saidel-Baker examines a stronger-than-expected jobs report showing 130,000 jobs added and unemployment dipping to 4.3%—but asks whether the optimism is premature. January data is often volatile, and revisions could quickly shift the outlook. If labor market resilience persists, the Federal Reserve may have less incentive to cut rates, extending pressure on borrowing costs and strategic investment decisions. Meanwhile, renewed scrutiny around Fed independence and global monetary stability adds another layer of uncertainty. If rate relief is delayed, how should businesses recalibrate hiring, capital spending, and financial planning for the months ahead?

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Key Episode Takeaways

  • 00:18 – Jobs report beats expectations with 130,000 added
  • 01:05 – Why January labor data can be misleading
  • 01:45 – Downward revisions and political implications
  • 02:32 – What this means for the Fed and rate cut timing
  • 03:02 – Bank of Canada comments on Fed independence
  • 03:45 – Global uncertainty and leadership credibility
We're still seeing just above even odds on a cut coming in June, so we will get a lot more data between now and then to see when and if we do get another cut. - Lauren Saidel-Baker Share on X
The market is really taking this number as more reason to keep a pause on interest rate cuts. - Lauren Saidel-Baker Share on X

The below transcript is a literal translation of the podcast audio that has been machine generated by Notta.

Hi, I’m Lauren Saidel-Baker, and thank you so much for joining us for this Friday the 13th edition of ITR Economics Fed Watch. Well, we’ve had our big surprise in data for this week, but unlike your usual Friday the 13th surprise, this was actually a surprise to the upside. We did get the delayed jobs report, should have come last week, but with that little delay with the government shutdown, we did get it earlier this week, and the report was a beat. 130,000 jobs created on the headline basis. The unemployment rate did drop from 4.4% to 4.3%, so this is a very strong result. Now again, we’ve been talking in recent episodes about just what that break even is, how many jobs need to be created really to be sustaining at this level with immigration, with several other factors out there, but 130,000, we will take that result today, and the market certainly has taken that as a good sign.

I do want to point out though, the January data point is typically quite noisy. There are some methodological issues with basically looking back to that busy holiday season, a lot of temporary work, part-time work, holiday seasonal work, so there’s a chance that we see revisions to this number. Again, don’t let that catch you off guard. Speaking of revisions, we did see some significant downward revisions to the 2025 data. At this point, I know the question on everyone’s mind is when there’s a significant downside revision, could that trigger some political actions? We saw that this past summer when there were significant downside revisions to these same job numbers that Trump actually fired the head of the Bureau of Labor Statistics, claiming that this was politically motivated. We did see a few messages come out from the White House in the wake of this job’s report. Doesn’t seem like that is high priority for this administration at this point. Trump called the numbers good, a great beat. He really talked them up.

In the same sentence though, did say that the Fed should be cutting interest rates. How those two tied together maybe is for a different episode of this show, but let’s bring this back to what it means for the Fed. The market is really taking this number as more reason to keep a pause on interest rate cuts. I think that is the most likely case in the next few months. We’re still seeing just above even odds on a cut coming in June, so we will get a lot more data between now and then to see when and if we do get another cut. I want to take this a little bit offshore at the moment. We don’t usually look at too much at other central banks, but we did get a lot of messaging this week from the Bank of Canada specifically with regards to the Federal Reserve. In their statement, the Bank of Canada actually raised some questions about whether the challenge to Fed independence would add to turbulence, as they put it, and to global uncertainty. Now, they did this in a meeting that held rates steady at 2.25%. This wasn’t an overwhelming concern, a reason to really need to cushion things. They did also list a few other factors in that global uncertainty. Places like Venezuela, Iran, Greenland, again, has come to the forefront.

However, we’ve also seen a very warm welcome from Bank of Canada, especially Governor and several other officials who welcomed Warsh said that he is a fantastic person for this job of being the next Fed Chair. There’s a lot of international credibility.

While there are still questions, we are going to be tracking those going forward, but it seems like all is quiet on even this Friday the 13th front. Thank you so much for joining us today. We hope you’ll be back with us next week right here on ITR Economics, Fed Watch.