Rise and shine everyone.

It’s Jobs Friday again, and the last print ahead of the next Fed meeting. Yesterdays’s PCE report was marginally hotter than expected. This has some reconsidering whether the Fed will cut rates next week. I don’t know if the election will impact the Fed - but a reasonable person would think that it will. But, we’re also focused on the Jobs number today, because that may also sway their decision.

At present, the Fed Funds Futures is still pricing in a very high probability that the Fed will ease by 25bps on Nov 7.

Turning to the jobs report, the consensus is for the addition of 125k jobs, far lower than last month’s surprisingly strong +250k. The unemployment rate is predicted to remain at 4.1%. The recent hurricanes and strikes (such as Boeing), is what is weighing the estimate down. However, jobless claims have been little moved by the hurricanes.

Surprisingly though, the ADP number earlier this week came in much higher at 233k vs. the estimate of 111k and 159k prior. We all know that the ADP has not been a reliable predictor the NFP for a long time now. But, it makes us wonder whether the NFP will also come in stronger.

Will a strong jobs report deter the Fed from cuts, given the slightly hotter inflation print? That will certainly be the question on everyone’s mind over the next few days.

The market is not happy with all the uncertainty. We saw a significant rise in volatility yesterday, and it’s quite likely that people are hedging heavily into next week’s events - the US elections and the Fed meeting.

We are seeing some respite this morning as US Equity Futures trade marginally higher, despite disappointing results from Apple yesterday. Amazon, however, delivered a more optimistic set of numbers. Commodities are also higher, alongside the USD.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)