Harkster Preview - NFP One Pager

The bar to a hot print is very low after this weeks US data

Everything @HarksterHQ was expecting to write for this week’s NFP preview has been ripped up by the weakness of the US data to start the week. As a result of the 10y real rates rally and USD sell off, the bar to a strong number is very low. 

• JOLTS was clearly weaker than expected and is trending lower, however, the ratio of open jobs to unemployed is still at 1.5 and above 1.2 

• Consumer Confidence headline drop to 106 was stark but as Brent Donnelly illustrates well in his NFP piece, the internals show a rapidly normalizing labour market.  

• ADP: even after changing the methodology, the error to NFP is very high. Furthermore, the revisions to the previous month easily offset the headline miss. 

• ISM Employment Index maintained its downtrend but feeds into NFP directionality with a lag. 

• Q2 GDP downgrade... looking in the rear-view mirror but the starting point for the US economy as we return from the beach is worse than the market expected.

• CITI Surprise Index for the USD has clearly rolled over 

• Atlanta Fed GDPNow Forecast for Q3 ... all the good news in the price at 5.9% and has plenty of data to mean revert in the coming months. 

• Initial claims... this data always leads UER and we're still to see a material track towards 300k. Once again today it demonstrated frustrating resilience for duration bulls.  

• After everything we've seen this week I'm surprised that Bloomberg's Whisper number remains at 167k and so close to the Economist Survey Estimate of 170k. If the USD / SPX / XBT / 10s moves are anything to go by, traders are clearly expecting a downside miss tomorrow and a US recession to come faster than thought. The market has dropped its probability of a Sept hike to 10%... now the question is whether they will hike in Nov! 

Looking ahead...

• USD Seasonals for September are bullish as well as the month being typically negative for SPX  

• Can we stay in the middle of the USD smile? A US recession is good if it slows the Fed from hiking more but at the same time the economy doesn't collapse. It's key for USD bears to see soft landing vibes in tomorrow's NFP print and Sept 13 CPI print. The read across from the Eurozone inflation will disappoint equity bulls looking for the Fed to declare victory on inflation. 

ㅤ

For further reading and research on tomorrow's labour data, see the week ahead summaries compiled in last Sunday's The Weekly Hark as well as some of the key previews captured on Harkster.com over the past few days. If you found this preview useful, please give it a ‘Like’ at the bottom of the page. It only takes a few seconds and helps our free commentary reach a wider audience. 🙏

---

• Brent Donnelly: The Incredible Rapidly Normalizing US Jobs Market

• ING FX Daily: Low vol environment continues

• Fidenza Macro: The best days are behind for the US consumer

• Macro Hive: NFP Review - Labour Market Remains Very tight

• LiveSquawk: US Jobs Gains Set To Moderate, Raising The Bar For Additional Fed Rates Hikes

• The BondBeat: 10s a ‘screaming buy’

  ㅤ

Follow the latest market narratives through our curated research & commentary channels on Harkster.

 ㅤ

 

 

The information provided in this post is for general information purposes only. No information, materials, services, and other content provided in this post constitute solicitation, recommendation, endorsement or any financial, investment, or other advice. Seek independent professional consultation in the form of legal, financial, and fiscal advice before making any investment decision.