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Non-farm payrolls preview

Consensus estimate: 400,000 jobs added in February

Given how much the geopolitical landscape has changed during the last week, you’d be forgiven for thinking that today’s US non-farm payrolls numbers is somewhat irrelevant.

However, with the Russian invasion of Ukraine sparking a surge in commodity and raw material prices, high inflation levels are about to get even higher…

This makes the fear of stagflation (high inflation and stagnating economic growth) more prevalent than ever.

And traders will be waiting to see if the Fed continues to try and reduce inflation by hiking rates, or whether the rising prospect of stagnating global growth clips the wings of the hawks.

We can see from the dollar index chart (above right), that January’s non-farms marked a key inflection point, and February’s has the potential to do the same…

Today’s jobs number represents a ‘pre-war’ temperature check of the US economy. It is also the final monthly employment report before the FOMC gathers for its upcoming March meeting.

Consensus estimates indicate that job growth is likely to top 400,000 with the unemployment rate falling to at least 3.9%.

A strong number could ramp up pressure on the Fed to hike harder and faster, whereas a weak number could actually be cheered on Wall Street, as it would raise the prospect of the Feb backing off.

S&P 500 Daily Candle Chart