With the US labor market under intense scrutiny right now, nothing is more important than Friday’s jobs data. Nonfarm payrolls will be crucial in determining how markets end the week. And it’s not just the headline numbers that will matter, the details – especially the unemployment rate – will matter as well.
Yesterday, we got a quick glimpse of this week’s key US data mix:
I would argue that the ADP was more like a poker bust and the ISM services PMI was more like a turnaround. A quick Google search will give you a rundown of these terms but I’m sure you feel like you already know them. That would make today’s NFP the final card dealt to the table.
The failure signaled further slowdown in the U.S. labor market. However, like the ADP report itself, it is not the most important report. Be everything, be the end of everything An indicator of how the round is going. The shift certainly kept things interesting as the Institute for Supply Management’s services PMI suggested that other parts of the economy are still doing well.
So, there is a balance to be struck here in balancing the additional downside risks to the dollar and a more dovish Fed.
Today will all come down to the most important data release in the past three months. The US CPI is no longer the wild card when it comes to economic data. It has now been replaced by the US jobs report.
Traders are currently pricing in about 43% odds of a 50 basis point rate cut this month and about 110 basis points for the rest of 2024. Now it’s a matter of verification. Here, market players will have to look to the river to decide whether the odds are in their favor.
From yesterday: