Waiting on a knife edge
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How will the US non‑farm payroll data affect the Fed’s decision on a 25 bp vs 50 bp rate cut?
So we are very close to non-farm payrolls now. The number that will likely determine whether the Fed cuts by 25 or 50 basis points. We'll look at what to expect. Lots of confusing job numbers over the last 24 hours. You could argue in any direction as to where we go from here. And closer to home, let's look at what Michelle Bullock said at the Anika Foundation yesterday. Nothing to keep Jim Chalmers happy, that's for sure. It's Friday, it's the 6th of September 2024. It's the morning. Good morning. Well, the US dollar is lower by 0.3% this morning on the DXY. The Aussie up less than 0.2%, though, below 67.4 US cents. The yen, the euro, and the pound also all up 0.2%. Bond yields have pushed down further. Another three basis points lower for 10-year treasuries, down to 3.73%, down two basis points in Germany and the UK.
Aussie 10 years were down two basis points yesterday to 3.92%. One basis point higher now on futures and shares. Well, they're mixed. The close, the NASDAQ is up a quarter percent, but the S P has lost another naught point three percent, uh, and uh it's just above the five thousand five hundred level. The Dow half percent lower, the Russell two thousand naught point six percent lower. So stocks unrotating, if there is such a word. In Europe, the Eurostocks fifty closed down naught point seven percent, the DAX is fairly flat.
What are today’s key currency and bond market movements before the payroll release?
It was the Cat Carrant That fell the most, losing 0.9%. And not much going on with oil. WTI is flat, Brent marginally up just below 72.80 a barrel. There was news earlier in the week that OPEC is planning to delay output cuts for uh October to start in December instead. So it's not quite Friday in the United States, of course, but when they get there, it will be payrolls day. One that will be somewhat more significant than it has been for a very long time, I think. He's excited, we're excited, markets are nervous. But before we look at that, let's look at the numbers we got uh last night, the ADP numbers and the weekly jobless claims, actually telling opposite stories, weren't they? So the initial jobless claims are down, presumably that means more people are working, but the ADP employment numbers show that the change in jobs are down, so um less jobs than expected, basically.
Morning, Phil. Um yes, in the sense that uh you know, you've got two numbers, one little bit s weaker than expected or lower in claims and um you know, which essentially is good, but remember in terms of the survey sampling period, um these claims numbers um effectively post date the survey period for the non farm payrolls numbers that we'll get tonight. Nevertheless, the um you know, clearly that sort of blip up in claims that we had sort of four or five weeks ago has not been repeated. So generally speaking, you know, the claims data is telling you that, you know, the rate at which people are being laid off from work is still relatively subdued. Um, you know, it's really a case of, you know, um, you know, a reduced rate of hiring effectively by by companies rather than uh a traumatic increase in layoffs.
But um and the ADP report, you know, the usual health warning, not a great month to month guide, but certainly consider Consistent, I think, with further signs of a calling in the labour market and you know, as we you know, she talked about earlier in the week following that um those JOLTS data. So um you know overall though, nothing I think to really move the dial as far as expectations for tonight's all important period.
Well hence we haven't seen big market moves, have we? But that ninety nine thousand job for the ADP, that is you know, as you say, there's a g it comes with a health warning, but that is the lowest number in three years. That's right.
How did the latest ADP employment report and jobless claims shape expectations for the payrolls?
That is indeed. Similarly, no real strong signals from, for example, the employment component of the services ISM, which again was came in much of a muchness, really, not much different from expectations. Still that contrast between what the SP global uh vintage of the PMI is saying. The final reading there was up to what 55.7 from a preliminary fifty.
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Chapters
8 chapters
1
How will the US non‑farm payroll data affect the Fed’s decision on a 25 bp vs 50 bp rate cut?
0:01–1:18
2
What are today’s key currency and bond market movements before the payroll release?
1:18–3:23
3
How did the latest ADP employment report and jobless claims shape expectations for the payrolls?
3:23–4:56
4
What does the Beige Book reveal about Australian economic activity, wage growth and consumer spending?
4:56–6:43
5
How might Fed speakers John Williams and Christopher Waller steer market expectations after the data?
6:43–8:40
6
What are the projected scenarios for the Fed’s rate cut after tonight’s payroll numbers?
8:40–10:28
7
How is Australia’s housing‑affordability crisis affecting households and the broader economy?
10:28–12:29
8
What are the latest European economic indicators and what do they imply for global growth?
12:29–14:08