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7th Jan 2022. 10.55am

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Non-farm payrolls preview

Consensus estimate: 400,000 jobs added in December

How healthy was the US labour market prior to the hit from Omicron?

That’s the question traders will be asking this afternoon, as December’s non-farm payrolls number hit our screens.

If US private payrolls are anything to go by, the answer is very healthy indeed…

Private payrolls rose by 807,000 last month, the biggest increase since May and almost double analyst expectations.

Should this afternoon’s non-farms mirror that of private payrolls, then it would surely apply even more pressure on an already hawkish Fed.

And the impact of a hawkish Fed can be seen on the currency and bond markets. The US dollar index has remained near 52-week highs following last months payrolls (see chart right) and the yield on US 10yr government bonds has broken to six-month highs this week.

Consensus estimates indicate that job growth is likely to top 400,000, with the unemployment rate falling to at least 4.1%.

A stronger than expected number would surely see a continuation of Wednesday’s ‘spec tech wreck’ which was loss-making tech stocks fall sharply as traders priced-in the impact of a quicker pace of rate hikes.

Whereas a weaker than expected number could bring some reprieve for US tech, but would indicate that the US labour market was not as strong as first thought prior to Omicron.

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This research is prepared for general information only and should not be construed as any form of investment advice.