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With the Fed now on hold well into 2020 (by which we mean no rates hikes ever and a rate cut as soon as the S&P drops more than 10%), Powell's reaction function is once again data-dependent, which is why tomorrow's payrolls report might actually matter to markets: if very strong, it may just skewer stocks as the odds of a rate hike, improbable as they may be, will rise; if ugly - which is far more likely after our analysis over the weekend and yesterday's disastrous ADP - it could send the S&P to new all time highs as traders anticipate another rate cut in the coming months.
With that in mind, here's what consensus expects the BLS to release tomorrow at 8:30am ET: An above trend 180k in November; The unemployment rate is seen unchanged, though some gauges suggest the jobless rate could be subject to upside risk. The pace of wage growth is seen rising a touch in the month. Other indicators have been mixed; the ADP gauge of payrolls missed expectations, but did not contain the positive impact from GM workers returning from strikes; jobless claims data surged to a five-month high in the survey week, though has subsequently fallen towards the low end of its recent range, providing a mixed signal. The ISM manufacturing survey's employment sub index was weak, though the services gauge, which is more representative of the US economy, ticked up slightly. Meanwhile, announced job cuts are down on a monthly and yearly basis, though the YTD measure in November was the highest since 2015.
Non-farm - Payrolls - Exp - Prev
Non-farm Payrolls: Exp. 180k, Prev. 128k.
Private Payrolls: Exp. 175k, Prev. 131k.
Payrolls - Exp - Prev - -36k
Manufacturing Payrolls: Exp. 38k, Prev. -36k.
Government Payrolls: Prev. -3k.
Avg - Earnings - M/M - Exp - %
Avg. Earnings M/M: Exp. 0.3%, Prev. 0.2%.
Avg. Earnings Y/Y: Exp. 3.0%, Prev. 3.0%.
Avg - Work - Week - Hours - Exp
Avg. Work Week Hours: Exp. 34.4hrs, Prev. 34.4hrs.
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