Macro Hive’s Post

The economic data over the past couple of weeks has been pivotal in shifting market-implied probabilities of a 25bps rate cut in September from 46% at the start of June to 74% today. My framework for understanding how data translates into this probability is straightforward: The FED has a dual mandate to promote maximum employment and stable prices. These two variables are generally complementary, so the FED's role is to strike a balance between them. When new data disrupts this balance, the FED uses its monetary policy tools to restore it. While Core-PCE (prices) has hovered just below 3% since the start of 2024, the real action has been in the labor market, contributing to the imbalance. This has led the market to anticipate rate cuts in September. https://lnkd.in/e2JXMY78

Part 1 Have you heard of the 'whisper number'?🤫 Whisper numbers are very popular on Wall Street in particular. It refers to projections that experienced traders, analysts and fund managers make. These numbers are unofficial and have not been published but are rumoured to be accurate. Today we get Non-Farm Payroll (NFP) data. US. Non-Farm payrolls are a monthly statistic representing how many people are employed in the US, in manufacturing, construction and goods companies. It is especially important after this week of moderating labour data out of the US. Bad news is potentially good news for markets especially when bad news may accelerate the rate cutting cycle in the US which has knock on effects for the US economy and therefore global economies. The whisper number for today's NFP is 166,000, compared with a survey median estimate of 180,000 jobs. Should we see this lower whisper number today it could add weight to a cut in September. Money market participants see a roughly 69% chance of the Fed kick-starting its policy easing cycle in September. It may also give weight to more than one cut this year. Translating a lower NFP print into market movements today - we could see continued positive momentum in bonds and equities. Of course, data such as this today cannot be taken in isolation but taken in aggregate we could start to see a trend emerge. #whisper #NFP #dataprintoftheday

Check out our latest Key Events: NFP to Show Labour Market Remains Tight G10 In the US, the main data releases are: -NFP – Friday. Consensus expects 185k and unemployment at 3.9% – i.e., a tight labour market still. I agree. -Trade balance – Thursday. A downside surprise to the consensus estimate of ‑$69.7bn would indicate a buildup of domestic demand pressures. -JOLTS – Tuesday. We expect continued declines in labour market flows and continued labour market rebalancing. -ISM PMIs – Manufacturing Monday, Services Wednesday. Consensus expects a small improvement in manufacturing to 49.9 from 49.2 in April and a larger one in services to 51 from 49.4 in April. Trade the PMIs using our event monitor. Elsewhere in G10: -Japan Labour Cash Earning – Wednesday. Consensus expects 2.1% YoY from 2.2%. A beat would mean the tight labour market is translating to high wages. Also watch the core measure (‘scheduled full-time pay’): consensus is for a drop from 2.3% to 2%. -Switzerland CPI – Tuesday. Consensus expects headline to rise to +1.5% YoY from +1.4%, below quarter-end forecasts (+2%). This means a June cut is more likely than the market is painting. Elsewhere, watch imported inflation – Jordan threatened FX intervention if currency weakness leads to inflation. Read full article here: https://lnkd.in/e6wifrWq

#Employment data released Friday was a mixed bag, prompting modest profit taking in U.S. equity markets. The headline showed that U.S. non-farm #payrolls rose by 275k vs the 190k consensus. However, backward revisions to Dec/Jan shaved 167k, making the overall result below expectations. Then, there is the #unemployment rate which rose 0.2% to 3.9%, while at the same time, the #participation rate held steady at 62.5%. And AHE came in at 0.1% (vs 0.3% exp) on the month, but in line with expectations (4.3%) on a yearly basis. The next big driver will be Tuesday's CPI release (+0.4% exp headline +0.3% exp core for Feb as per Marketwatch)

Start your week with iCM's Markets in a Minute! In this week's Markets in a Minute, iCM's Director of Investments - Ryan Lehman, CFA, CAIA, provides insights into last week's JOLTS and non-farm payrolls data, the potential for a super-sized rate cut in September, and the latest ISM new orders data, which has the potential to impact earnings over the next few quarters. Click here for the video on YouTube - https://lnkd.in/e-MMX_Fb Subscribe on YouTube to get notified of the latest video content from iCM!

🌟 Exciting insights from today's Jobless Claims report for the week ending July 13th! The elevated claims of 243k, exceeding the 230k forecast, indicate potential implications for the upcoming nonfarm payrolls report. 📊 The direct correlation between elevated claims and NFP outcomes amplifies the significance of this latest data release and points towards potential market impacts in the near future. 🔍 The strength in today's Philly Fed Index was overshadowed by the elevated claims, creating an unusual market dynamic where the claims data punched above its weight. 📈 Despite initial volatility, bonds managed to push back against overnight weakness, showcasing resilience and potential opportunities for investors. 💡 Prediction: Given the juxtaposition of elevated claims and the market response, there might be continued volatility in the short term, presenting both risks and opportunities for market participants. 🚀 Stay tuned as we navigate these market dynamics together and position ourselves strategically to leverage potential opportunities that arise from these evolving trends. #JoblessClaims #MarketInsights #FinancialOutlook #InvestmentOpportunities #StayTuned

Here's a market update from our CIS, Tim Pierotti. WealthVest, Wade Dokken. "Every month I say the same thing which is that I find it bizarre that the financial world obsesses over such a poor set of data, but it is what it is. With that, the data: Non-Farm Payrolls came in at 353k jobs versus an expectation of less than 200k and previous months were revised sharply higher. The Household survey, from which the unemployment rate is derived came in negative at (31k) jobs – just a 384k difference in two measures of the same thing, no big deal. The unemployment rate remained flat at 3.7% Here is where it gets even more incoherent: Avg Hourly Earnings grew a huge 4.5% while hours worked fell and participation remained flat amid a downward trend. One explanation is that full-time employment is falling while part-time is surging. Temp jobs, which tend to lead the employment data, grew slightly after more than a year of falling. In contrast to that, Robert Half (RHI)and Manpower (MAN), which are the two largest staffing companies in the world just printed weak results and tepid guidance.   The immediate market reaction to the data was a hard move higher across the Treasury curve and, not surprisingly, a surge in the front end as the odds of a March rate cut has fallen from around 80% a couple weeks ago to around 20% post this data. The odds of a cut in May are falling slightly as well. To be perfectly honest, I don’t know what to think. Corporate profits are under pressure. Despite what we saw from Amazon, which continues to make Walmart look like a Mom & Pop relatively speaking, earnings from Q4 are double-digit negative across the IWM (small caps and mid-caps) as well as the non-megacap part of the S&P. Econ 101 tells us that when companies are seeing margin pressure, they begin to cut jobs, but that doesn’t appear to be happening.  Sentiment across the economy is strengthening. This unprecedented wage growth is a two-edged sword. Stronger wages are inflationary, but it also means that people have more money to spend and they are clearly spending it. So where does that leave us? Confused firstly. Our best guess is that we have an economy that will remain around full employment. Wage growth will remain strong, and we reiterate our view that the Fed will cut three times or less this year versus the recent market expectation of as many as seven cuts. We also think the trend of negative earnings revisions will remain in place. Does that mean lower equities? That would be the intuitive assumption, but the trends I just described have been in place for a long time now and equities continue to march higher so I will refrain from any stock market prognostication other than to say: Don’t fight the tape, but the risk/reward doesn’t look great to me."

Staggering accuracy of CEIC Non-Farm Payrolls Nowcast, which should surely give Investment professionals an edge, particularly when combined with EPFRs Investor Sentiment Flows data, now available on the CEIC Platform.

Market Recap for 10/4/2024 Topics covered: Major World Market Indices https://lnkd.in/eBwETsjc U.S. Initial Jobless Claims https://lnkd.in/ewP234wv U.S. Continuing Jobless Claims https://lnkd.in/e9kDiaTs U.S. ISM Manufacturing Purchasing Managers Index (PMI) https://lnkd.in/g_vnEUTn U.S. Construction Spending MoM https://lnkd.in/esMUzKDw U.S. ADP Nonfarm Employment Change https://lnkd.in/g4TfdS2Y U.S. Total Vehicle Sales https://lnkd.in/gQwNy-PK U.S. Factory Orders MoM https://lnkd.in/ejrmSaBb U.S. ISM Non-Manufacturing Purchasing Managers Index (PMI) https://lnkd.in/g7VhdBQv U.S. Private Nonfarm Payrolls https://lnkd.in/g-6t78si U.S. Unemployment Rate https://lnkd.in/gtuZ74g7 U.S. U6 Unemployment Rate https://lnkd.in/gFQ-7e3F U.S. Participation Rate https://lnkd.in/eXcPPYux Equities rise with dollar, strong US payrolls dampen rate cut hopes https://lnkd.in/g6rj3m7N September Employment Report https://lnkd.in/gBJ45tHy The Dockworkers Were Just The Start: Other Unions Will Now Strike, Expecting 62% Wage Increases https://lnkd.in/gP2Kv_Wh For inquiries or to book an appointment go to www.dsafinancialgroup.com. This commentary contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this commentary will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Investment advisory services offered through DSA Financial Group, Inc., a registered investment adviser.

"The Fed has always talked about looking at the data. Despite the market clamoring for cuts earlier in the year, they waited. Weakening employment numbers triggered a fifty-basis point cut; however, the trajectory for a further three cuts before Christmas was curtailed as September’s Nonfarm Payrolls came in strong. The curve has backed up so much that a full two cuts aren’t priced in for the year, with expectations for rates now bottoming out in mid-2026 rather than late 2025." — James Balfour, CFA (Senior Portfolio Manager) Click the link below to read the full article 👇 https://bit.ly/4873Or1