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Non Farm Payrolls Preview

02/11/2018

This is the bellwether of employment market health, and the market is expecting a rebound from September’s disappointing figures, and will also pay particular interest to the wage growth component. A figure of +190,000 would be a good starting point, with Average Hourly Earnings forecast to show a 0.2% rise, bringing the annual increase to 3.1%. Strong data here would be of particular interest to those watching the Federal Reserve for signs of any future rate increases after the Fed raised borrowing costs in September for the third time this year.  The unemployment rate will also be of significance, particularly with the U.S. Mid Term elections coming next week. Here too, the picture is expected to remain strong at 3.7%, its lowest for 49 years. This is going to undermine any economic argument the Democrats might have relied on to criticise the current Administration, and nothing is more persuasive to voters than an improvement in their situation, which does not bode well for the “Blue Wave” that the Democrats are relying on to continue to their attempts to derail the Presidency of Donald Trump. As usual with significant data, the risk is not so much in the numbers, but in the way the market is positioned ahead of those numbers. There will doubtless be some withdrawal of liquidity immediately before and after the release that might catch out anyone with tight Stop Losses in place, so caution is advised.

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