Amazing write up EventsTrader!
I have a theory about the employment report... Between NFP and Avg Hourly Earnings (AHE), I think AHE is more important right now. NFP speaks to the strength of the labor market, but a low print isn't all that significant since the US is already at full employment. AHE speaks directly to inflation which is more important now since we're at the point in the cycle where there should be accelerating inflation. Plus, the Fed is expected to cut due to low inflation so a high AHE print would throw a wrench into their plan.
Where this gets really interesting is the market's reaction to the past few releases when there has been an NFP beat coupled with an AHE miss. The initial reaction has been to from the NFP beat, but it later reverses once people realize AHE missed. This has happened a few times now and it looks like something you could trade. If NFP and AHE differ, fade the NFP move and bet on AHE.
I have a theory about the employment report... Between NFP and Avg Hourly Earnings (AHE), I think AHE is more important right now. NFP speaks to the strength of the labor market, but a low print isn't all that significant since the US is already at full employment. AHE speaks directly to inflation which is more important now since we're at the point in the cycle where there should be accelerating inflation. Plus, the Fed is expected to cut due to low inflation so a high AHE print would throw a wrench into their plan.
Where this gets really interesting is the market's reaction to the past few releases when there has been an NFP beat coupled with an AHE miss. The initial reaction has been to from the NFP beat, but it later reverses once people realize AHE missed. This has happened a few times now and it looks like something you could trade. If NFP and AHE differ, fade the NFP move and bet on AHE.
Self-sufficiency is the greatest of all wealth. - Epicurus
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