Non-farm payrolls are due at the bottom of the hour and there is the usual chorus of ‘most-important jobs report ever’ talk but I’ll take the opposite side of that.
The consensus is +200K and I don’t think it matters much if it’s 100K on either side of that. Of course, the market will react and it could react in a big way given the freak-out yesterday.
But if the numbers are hot, I don’t think it’s so consequential. Yes, it might nudge out the timing for the first hike by a month but it doesn’t change the overall backdrop, which is a huge Fed put. I also think there’s an increasing discussion around immigration that finally has the market’s attention. The unusual strength in jobs in the past year even as the unemployment rate was rising can be explained by far more people entering the country than the official count.
What I think does matter are earnings. The consensus on average hourly earnings is +0.3% and everyone will be watching that closely. It’s a number that’s worth going to the second decimal point on as I believe +0.26% is significantly different from +0.34%. For what it’s worth, Goldman Sachs is at +0.2%.
If there’s a divergence between jobs data and wage data, go with the wage number. If all is close to consensus, I’m inclined to sell the US dollar and buy risk trades on a reversal of the Israel-Iran fears from yesterday, though that might have to wait until Monday given weekend risks.
Also note that Canadian jobs numbers are due out at the same time. The rest of the economic calendar is here.