As the U.S bond market signals more economic pain for the U.S economy ahead, global markets remain under pressure on Wednesday as all eyes turn to the U.S Non-Farm Payrolls.
Bond markets are at odds with the current optimistic mood in the equity market but fears of a U.S recession are back on the cards as longer-term yields fall below shorter yields. The U.S. 2 and 10-year Treasury yield curve inverted on Tuesday for the first time since September 2019.
Here is what’s expected this week:
The U.S Non-Farm Payrolls (NFP)
The total non-farm payroll employment in February surprised market participants and rose by 678K as unemployment edged lower to 3.8%. The U.S labour market is growing across the board led by an uptick in leisure and hospitality, professional and business services, health care, and construction.
Over the last 12 months, there have been an increase in U.S non-farm employment across 48 states and unchanged across 2 states. The report might deliver another surprise this Friday and come in higher than expected if the current growth rate continues.
The U.S non-farm payroll (NFP) report for March will be released this Friday the 1st of April at 14:30 SAST and these are the data expectations:
- Jobs number: 490k expected vs 678K previous
- Hourly earnings(YoY): 5.7% expected vs 5.1% previous
- Hourly earnings(MoM): 0.4% expected vs 0.6% previous
- U.S Unemployment Rate(Mar): 3.7% expected vs 8.8% previous
Key events to watch ahead of the U.S non-farm payroll (NFP) report:
- The U.S ADP Nonfarm Employment Change (Mar) – Today 14:15 SAST
- S GDP (QoQ)(Q4) – Today 14:30 SAST
- Crude Oil Inventories – Today 16:30 SAST
- US Initial Jobless Claims – Thursday 14:30 SAST
- ISM Non-Manufacturing PMI (Mar) – Friday 16:00 SAST
The Wall Street 30 Technical Analysis
U.S Indices pushed higher as the bulls took control despite a very volatile week across the globe which saw the Wall Street 30 (WS30) chop higher through key resistance points.
We might see the price action lower on the WS30 as the bond market comes into focus and with U.S Non-Farm Payrolls (NFP) on Friday. Major support price levels to watch will be the 35038, 34692 and the 50-day simple moving average of price (blue line). The possible target price higher still remains at the 35635-resistance level.
Current State / Chart Source: Wall Street 4H Timeframe - GT247 MT5 Trading Platform
Why is the jobs number important?
The Non-Farm Payrolls report (NFP) is treated as an economic indicator for people employed during the previous month, and the number being released will have a direct impact on the markets. In the United States, consumer spending accounts for most of the economic activity, and the Non-Farm Payrolls report represents 80% of the U.S. workforce. Farmers are excluded from the employment figures due to the seasonality of farm jobs.
Trading Term of the day:
Inverted Yield Curve
An inverted yield curve describes the unusual drop of yields on longer-term debt below yields on short-term debt of the same credit quality. Sometimes referred to as a negative yield curve, the inverted curve has proven in the past to be a relatively reliable lead indicator of a recession.
Take note: The outlook and levels might change as this outlook is released during the current days (Thursday the 30th of March 2022) U.S Market open.
Sources – MetaTrader5, Reuters, United States Department of Labor, U.S Bureau of Labor Statistics, Investing.com, Tom Wilson and Alun John.
When does the Non-Farm Payroll Announcement take place in South African time?
U.S Non-Farm Payrolls (NFP) report is live this Friday the 1st April 2022 at 14:30 SAST
Barry Dumas | Market Analyst at GT247.com
Barry has 13 years of experience in the financial markets. He enjoys educating clients on trading / investing and providing punchy technical analysis on securities. He currently holds a Wealth Management qualification and is studying towards becoming a Chartered Market Technician® (CMT) designation holder.
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