Tonight at 20:30, U.S. nonfarm payroll data is about to be released:
ADP payrolls added 38,000 jobs, below expectations and the prior reading, signaling a cooling in employment. This drove U.S. Treasury yields lower and eased expectations of further rate hikes. However, ADP is only a warm-up—the real factors shaping the Federal Reserve’s decision are the nonfarm payrolls, the unemployment rate, and wage growth. If nonfarm payrolls weaken, pressure for additional rate hikes should ease, and risk assets may rebound. If the data comes in above expectations and wages are strong, the market may worry about persistent inflation, and the Fed could turn hawkish again. In that case, Treasury yields may rise.
Tonight’s focus is on three indicators: new employment, the unemployment rate, and wage growth. At the moment, the market’s biggest fear is that the economy is too strong, inflation is stubborn, and interest rates remain high. A scenario where employment cools moderately without collapsing is the most favorable “soft landing” script. This nonfarm report is the first critical test of September’s market outlook.
ADP payrolls added 38,000 jobs, below expectations and the prior reading, signaling a cooling in employment. This drove U.S. Treasury yields lower and eased expectations of further rate hikes. However, ADP is only a warm-up—the real factors shaping the Federal Reserve’s decision are the nonfarm payrolls, the unemployment rate, and wage growth. If nonfarm payrolls weaken, pressure for additional rate hikes should ease, and risk assets may rebound. If the data comes in above expectations and wages are strong, the market may worry about persistent inflation, and the Fed could turn hawkish again. In that case, Treasury yields may rise.
Tonight’s focus is on three indicators: new employment, the unemployment rate, and wage growth. At the moment, the market’s biggest fear is that the economy is too strong, inflation is stubborn, and interest rates remain high. A scenario where employment cools moderately without collapsing is the most favorable “soft landing” script. This nonfarm report is the first critical test of September’s market outlook.
