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The Most Powerful NFP to Date

ByReiaan Hobson
Published 2024/09/06, 11:10

The upcoming Non-Farm Payrolls (NFP) report could settle the debate on whether the Federal Reserve will cut rates by 0.50% or 0.25% at its meeting on September 18, 2024.

The market has already priced in a rate cut, but the key question is how large it will be. Since Jerome Powell's Jackson Hole speech, which emphasized the importance of the labor market, it has become clear that the Fed’s main focus is now on employment rather than inflation, as inflation is already on a downward trend.

Given these factors, a weak NFP report could send shockwaves through the market, potentially pushing expectations toward a 50 basis point rate cut or even more. On the other hand, a strong NFP number could bring calm but might also create uncertainty about the Fed’s next move.

Last month’s upward revision of 800,000 jobs has raised questions about the accuracy of the employment data. If this month’s report surprises to the upside, it could further undermine confidence in the data and complicate market sentiment.

Recent data suggests the NFP could come in weaker than expected. The PMI manufacturing index remains in recession territory, the ADP employment report missed forecasts, and the JOLTS report showed a sharp decline in job openings. However, jobless claims have been steady and aligned with market expectations.

In Conclusion:

Today’s NFP report could either stabilize or unsettle the markets, given that it comes just two weeks before the Federal Reserve's decision. With Jerome Powell's recent focus on employment, the outcome could heavily influence the Fed's policy direction.

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