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Getting Ready for a Big Day; 2023's First Non-farm Payroll in Focus

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Miguel A. Rodriguez
Miguel A. Rodriguez
06 January 2023

The spotlight is still on the US labor market figures today. Analysts anticipate 200k non-farm payrolls and 3.7% unemployment in today's release of unemployment and non-farm payrolls. 

Wall Street's major indices fell on Thursday after data showed a tight labor market and comments from Federal Reserve officials pointed to higher interest rates for a longer period of time. ADP's national employment report showed a higher-than-expected rise in private employment in December, while another report showed weekly jobless claims fell last week. These figures followed the number of job openings in the United States, which was also higher than market analysts' expectations. 

 

Treasury yields, or market interest rates, rose slightly in response to these reports. Markets are concerned about a strong labor market because it gives the Federal Reserve an excuse to keep tightening financial conditions for longer than expected this year.  

 

Today, the most important labor market figures, the unemployment rate, and non-farm payrolls will be released. If this data also shows a tight labor market, such as a stable or falling unemployment rate and/or a high number of non-farm payrolls, markets may react negatively by discounting more aggressive interest rate increases. However, there is no strong correlation between previous data and what is published today, so there is still the possibility of stronger or weaker data. Analysts anticipate a 3.7% unemployment rate and 200k non-farm payrolls. 

 

On the other hand, comments from Fed official Bullard, one of the more "hawkish" voting members, were less aggressive than usual at the end of the day, pointing out that inflation is slowing and betting on a soft landing for the economy. These remarks boosted market confidence, but the level of uncertainty remains very high. 

 

In recent days, the North American indices all fell more than 1%, with technology stocks bearing the brunt of the damage. The US dollar strengthened again yesterday as interest rates rose in anticipation of today's non-farm payroll figure, which will determine the currency's course in the coming days. 

 

In the commodities market, it is worth noting the performance of Natural Gas, which has continued to fall due to global weather conditions with temperatures significantly higher than average for this winter season, resulting in a drop in gas consumption. Technically, it has reached a price concentration area of around $3.70, which should serve as price support. 

 

Today, investors will continue to focus on US non-farm payrolls to determine market price action. 

Sources: Bloomberg, Reuters 

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.