US Non-Farm Employment Change

August’s employment report, which was weaker than markets were expecting but stronger than our call, cements our view that the easing cycle will begin during the next Federal Open Market Committee Meeting (FOMC), which takes place September 17-18. We know that markets are still pricing in a 50 basis points reduction in the federal funds rate, but we make the case for a 25 basis point reduction below. But going back to the employment numbers, we believe that markets were being overly optimistic in expecting jobs in August to have ...

The US labour market is clearly cooler, but most indicators still show an economy operating at trend or higher. It makes sense for the Fed to start removing policy restraint, but we see little need to panic. Even if we saw some improvement in the employment report for August, the payback after the weak July data was smaller than we expected. Looking at the overall picture for the US economy, we do however still see the Fed reducing interest rates by 25bps in two weeks as the most likely outcome despite the market leaning heavily ...

The jobs report provides a real mix of numbers that does little to resolve the debate over whether the Fed will cut rates by 25bp or 50bp on 18 September. We have a 50bp in our forecast, but it is a low conviction call made on the basis that inflation fears have receded and the Fed will want to get ahead of labour market weakness, which we think will become increasingly apparent in the months ahead. In terms of the August numbers, headline non-farm payrolls rose 142k versus the 165k consensus, so a slight downside miss, but there ...

The US economy appears to be on a knife’s edge, and Friday’s jobs report will be the deciding factor as to the next direction. The August jobs report is expected to provide some much-needed clarity as to whether the labor market is slowing gracefully or spiraling quickly as was indicated by the recent weeks’ bleak batch of employment data. “The next set of job numbers released this week will be among the most consequential in a while,” Tuan Nguyen, US economist at RSM US, wrote in commentary issued Wednesday. Economists are expecting ...

Gold prices are trading just below record highs today as traders await the latest NFP data. Across the week, softer-than-forecast JOLTS job openings and ADP labour market data have kept the US Dollar pressured lower, keeping gold supported. If today’s NDP data comes in below forecasts too, this should amplify the current dynamic, creating deeper pressure on USD and allowing gold room to breakout. A heavy downside surprise at the start of August was responsible for the widespread volatility we saw across markets as US recessionary ...