Will Nonfarm Payrolls Make Investors Reconsider Bets Of A Fed Pivot?

US jobs data is set for release Friday, 7th April at 16:30 GMT+4, and markets are anticipating how the real reading will be compared to the expected and previous readings. Expectations indicate that the US economy added approximately 236,000 jobs in February 2023, compared to the previous reading of 311,000.


If expectations of 236,000 are correct, this would imply a break below an important support for employment data that has extended for more than two years. A reading of 236,000 would indicate a slowdown in the U.S. labor market, supporting previous data that showed a decline in job opportunities available in the United States in February, reaching its lowest level in 21 months. This brings the market consensus toward one key conclusion:  an expected halt in interest rate hikes from the Fed.


The jobs report is crucial in determining the Fed’s next move in its upcoming FOMC meeting. Potential scenarios are as follows:



Reading is better than the expected and the previous reading


A potential continuation of high interest rates, which according to analysts, could negatively affect gold, and stocks.


Reading is within or below expected


The Federal Reserve will deal with loose interest rates, which could negatively affect the dollar and potentially lift gold and stocks, according to analysts.


Reading is between the previous and the expected


Here we will monitor whether the reading will be lower or higher than the 250,000 support level. This scenario will most likely be the most confusing and volatile outcome for markets.



Overall, investors should consider the following points when looking and the Fed along with the overall macro environment.

  • The Fed has started hinting that interest rates may be nearing their peak.
  • What impact rising interest rates will have on corporate profits and growth. Markets have already witnessed a series of bank collapses in the United States and other countries.
  • Signals that the final interest rate necessary to reach the Fed’s inflation target of 2% may be higher than previous expectations.


When analyzing the expectations, traders should balance between the chances that the Fed continues winding back on interest rate hikes and the return of rate tightening at a higher pace.


In general, we expect that the jobs data release will be accompanied by large volatility in the financial markets, given that the Fed relies on this data to read the economic scene when taking its monetary policy decisions.



The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice.  Any view expressed does not constitute a personal recommendation or solicitation to buy or sell.  The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI.  Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients.