Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, said the US labour market has stayed resilient. He said it is softer but still “decent to pretty good”, while business reports on staffing suggest caution about labour market strength.
Kashkari said comments by Kevin Hassett about Fed staff research were “just another step” aimed at compromising the Fed’s independence. He said the Fed will focus on decisions based on data and analysis, and will avoid other “distractions”.
Ai And Productivity Outlook
He said most businesses are finding benefits from using AI. He said AI could boost productivity in the next five to ten years.
He said the Fed is cautious about using AI internally. He said there are strong guardrails to stop AI systems from accessing confidential data.
Kashkari said crypto is “utterly useless”. He said it is not clear what a stablecoin can do beyond what Venmo and similar services already offer.
The view of a resilient labor market suggests we should expect fewer interest rate cuts than the market is currently pricing in for 2026. The January jobs report, which showed a solid gain of 215,000 nonfarm payrolls, supports this cautious stance on monetary policy. This environment makes derivatives betting on a summer rate cut, such as certain Fed Funds futures contracts, look increasingly risky.
Market Implications And Positioning
We remember how throughout 2025, the market repeatedly priced in a dovish Fed pivot only to be disappointed by persistent wage growth figures. With average hourly earnings once again rising 0.4% last month, it appears this pattern is continuing. Therefore, option strategies on Treasury bond ETFs that profit from yields remaining elevated could be a prudent position over the next several weeks.
Meanwhile, the optimism around AI boosting future productivity is directly fueling sentiment in the tech sector right now. After a strong Q4 2025 earnings season, the Nasdaq 100 is already up 8% year-to-date, and implied volatility in AI-related stocks remains high. This suggests we should prepare for continued large price swings, making strategies like collars or straddles on leading tech names attractive.
The harsh dismissal of crypto adds to the regulatory pressure we saw build in late 2025, which has dampened market enthusiasm. With Bitcoin down nearly 15% from its recent highs and struggling to maintain the $85,000 support level, this sentiment from policymakers could trigger another leg down. We believe buying put options on publicly-traded crypto miners or exchanges could offer a way to profit from this sustained weakness.
