Today’s jobs report holds less meaning than previous reports this year. The Fed has already instituted the long-rumored QE3. One monthly data point also does not have much meaning for the broader economy. But traders will be itching to trade the data release regardless.
A few things to watch in the release:
- Last year’s September release beat expectations by more than 100k jobs, so there might be a seasonal effect (left over from 2008) that could lead to a release much higher than expectations
- The expected unemployment rate is 8.2%. The 8% level is clearly important psychologically because once we get below that level, gradual calls for a pullback in Fed accommodation could start to gain steam
- Manufacturing payrolls are expected to be unchanged. Last month was -15k. There have not been 2 straight negative readings since 2009. However, there were many negative releases throughout the bull market of 2003-2007. Possibly just another sign that manufacturing jobs losing their importance to broader economy
Though the market has been on a tear this year, payrolls day has actually been negative 6 out of 9 releases this year. Part of that has been due to weak data, but there has also been a tendency to rally into the report, similar to this week.
Markets overnight
- Quiet session ahead of payrolls. Asia was broadly higher, following the U.S. price action, though there was a 30 minute flash crash in Indian markets (briefly down 16%), so India the only region that finished in the red (-0.7% by close)
- Europe has been higher since the open, up 1% at 7:45am EDT. SPX futures up 0.2% in sympathy
- The dollar and Treasuries are flat, after both selling off yesterday during U.S. trading hours. Commodities are generally lower, after a strong rally yesterday