INSTANT VIEW-Sluggish Jan payrolls growth shouldn't pressure Fed to ease soon

Feb 7 (Reuters) - U.S. job growth slowed more than expected in January, likely restrained by wildfires in California and cold weather across much of the country, but a 4.0% unemployment rate probably gives the Federal Reserve cover to hold off cutting interest rates at least until June.

Nonfarm payrolls increased by 143,000 jobs last month after rising by an upwardly revised 307,000 in December, the Labor Department said on Friday. The moderation in job gains was also payback after December's robust performance. Economists had expected the establishment survey to show 170,000 jobs added.

MARKET REACTION:

STOCKS: S&P 500 E-minis EScv1 steadied and off 0.03% pointing to a flat open on Wall Street

BONDS: The yield on benchmark U.S. 10-year notes US10YT=RR jumped to 4.473%, the two-year note yield US2YT=RR jumped to 4.254% FOREX: The dollar index =USD ticked up to 0.2% firmer and the euro EUR=EBS extended a bit to a 0.2% loss%

COMMENTS:

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

“So basically, you know you had non-farms coming in less than than we expected, but there was a revision (to December’s payrolls) that sort of like negates the 143,000.”

“But the heating up of hourly wages, especially on the month of on a year-to-year basis, that’s no good.”

“Basically, it's a report that raises inflation and inflation fears. It means the Fed will probably continue with its wait-and-see attitude, and that wait-and-see might actually have to be longer than perhaps what the market is expecting.”

“I would say it's not going to be detrimental to stocks in a big way, but you can see the dollar strengthening. The 10-year (Treasury yield) is moving higher.”

“And that just means that the Fed is going to stay on hold for a while.”

LINDSAY ROSNER, HEAD OF MULTI SECTOR FIXED INCOME INVESTING, GOLDMAN SACHS ASSET MANAGEMENT (emailed comments)

"Mixed items here. Weak headline NFP with a miss to the downside, however a positive prior revision and an unemployment rate that ticked down to 4%. This month’s release was impacted by one-off factors including wildfires in California and a cold snap in other parts of the country … We think the Fed is likely to be cautious about reading too much into today’s report."

BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN

"The revisions always make it messy to tease out what is signal and what is noise. The payroll gain wasn’t great, but it was decent especially considering the jump in payrolls in November and December. Aggregate weekly hours fell for the month, but that could be due to a number of factors including the severe cold weather across much of the country and the wildfires in LA. Education and health care continue to drive most of the gains. The increase in federal employment will probably shift to a decline for a while. A good base case is to think that the Fed isn’t going to prioritize inflation over employment as they approach their March meeting."