News & Analysis

Non-Farm Payrolls

January 4, 2019

By Deepta Bolaky

Generally, the monthly changes in payrolls can be extremely volatile. Given its high relation with the economic policy decisions made by the Fed, the release of the nonfarm payrolls can trigger volatility in the markets.

The US labour market is expected to stay robust and the unemployment rate to remain steady at 3.7%. The US labour market is tightening, and investors will be keen to see if the figures will alter the dovish expectations recently adopted by the Fed.

Any unexpected uptick above forecasted figures in Non-farm payrolls and wages may send the markets in a spiral. As we step into a new year, investors started to increase the probability that the Fed’s next interest rate move will be a cut rather than a hike.

Investors are expecting the Fed to pause on the rate hikes. Today’s US employment report will be important to provide fresh insights on the outlook for interest rates as we note that the Federal Reserve Board will likely pay close attention to inflationary pressures over the months.

The FOMC and Jerome Powell speeches which are scheduled after the release of the employment report will also be scrutinised. There were some dovish comments from the Fed towards the end of 2018, but it was not enough to reassure panicked investors.

It will be interesting to see what the Fed will be signalling to the markets during the first week of the new year 2019.