Today at 15:30 MSK, the US releases its September labor market report. The consensus expects around +90 thousand new jobs after +162 thousand a month earlier. Unemployment is expected at 4.1%. But this time, the market's attention may be focused not only on the number of jobs, but on wage dynamics.
What's coming out at 15:30 MSK
The main indicator of the report is Non-Farm Payrolls, the number of new jobs outside agriculture. The forecast is around +89 thousand. In August, the economy added +162 thousand jobs, in July — +21 thousand. The unemployment rate is expected at 4.1%, unchanged from the previous month. Average hourly earnings are forecast to rise by 0.3% for the month and 3.2% for the year versus 3.1% previously. The range of NFP forecasts is wide: from +35 thousand to +180 thousand.
Why the market is watching wages
The yield on 10-year US Treasuries rose to around 5.34% the day before, the highest level since 2002. At the same time, the ISM manufacturing index came in at 54.5, and the prices paid component jumped sharply from 71.1 to 77.9. This intensified attention to inflation risks. Therefore, for the market today, the question is not only how strong the labor market remains, but also whether wage growth creates additional pressure on prices.
What's happening with rate expectations
The market estimates the probability of a Fed rate hike on October 28 at around 30%. Over the past week, this probability has noticeably decreased after softer signals from Fed officials and a weaker-than-expected PCE report. Today's employment report could change these expectations again.
What preliminary data shows
ADP showed employment growth of 90 thousand versus expected 75 thousand and 36 thousand a month earlier. The number of layoffs according to Challenger was 43,281 versus 52,881 previously. Initial jobless claims in the survey week were at 196 thousand versus 206 thousand a month earlier. At the same time, the final NFP often differs noticeably from preliminary indicators.
What will move the market
Today the market will receive two key signals at once:
- the number of new jobs;
- the pace of wage growth.
Under scrutiny will be the S&P 500, DXY, gold, US bonds and major currency pairs.
Scenario A: data comes in close to forecast. Yields may calm down before the weekend, and initial moves may turn out to be short.
Scenario B: employment and wages come in above forecast. Expectations of a rate hike on October 28 may intensify, yields may head up again, and the reaction may spread across several markets at once.
Trading half an hour around the numbers?
At 15:30, a trader is either already in a position or waiting for the first reaction after the data release. But prop firms have different rules for such trading. In one program, you can hold a position during the NFP release; in another, trading during the news window is restricted or prohibited. It's better to understand these conditions before buying a challenge, not after violating the account rules.