A note from analysts at Citi says that "relatively small differences in Friday’s jobs reading could materially affect Fed policy."
In brief:
- a headline non-farm payroll (NFP) of 125,000 with a 4.3% unemployment rate of 4.3% is likely to prompt a 50bp rate cut from the Federal Open Market Committee (FOMC) this month
- a 4.2% jobless rate, on the other hand, would see a 25bp rate cut
Citi analysts note the shift of focus from inflation to the jobs market in determining Fed policy, and it's a knife edge:
- "relatively small differences in Friday’s jobs reading could materially affect Fed policy"
- broader labour market trends indicate a steady weakening
- hiring is slowing hiring, declining hours worked falling, rising unemployment
- "We know from past cycles that once this cycle begins it has always progressed to a US recession"
Info comes via piecing together various media reports on the Citi note
