8:30: February employment report--a big improvement, but how big? The February report on nonfarm payrolls should look much better than its predecessor. Goldman expects a gain of 200,000 jobs, with risks skewed to a bigger increase. The two key issues are 1) the underlying trend in payroll growth—we think it’s at least 150,000 and perhaps stronger, 2) the extent of the weather-related “payback” in the report—most likely in the neighborhood of 50,000 or a bit more.
Markets clearly expect a strong outcome. The “consensus” forecast for nonfarm payrolls has moved up considerably over the past week and is now just below our own. Yesterday’s price action suggests that market participants have positioned for a strong release.
With all the attention on payrolls, the unemployment rate has flown under the radar. Yet it contains as much or more significance for the outlook, particularly given its prominence in the Fed’s “dual mandate”. Goldman's analysis suggests a close call between a 9.0% and 9.1% unemployment rate; a slight uptick is typical following very large month-on-month declines.
Nonfarm payrolls: GS +200,000 (risks to upside), consensus 197,000.
Unemployment rate: GS and consensus 9.1%
Average hourly earnings: GS +0.1%, consensus +0.2%.
10:00: Factory orders...a decent gain. This report will be a market afterthought, but should show a moderate gain given the headline increase in durables orders. Consensus: +2.0%.
11:00: POMO. Today's POMO is a meager $1-2 billion of across the curve TIPS purchases. Due to its size it will not be a factor, so the NFP number better be sufficient to validated yesterday's market lift off.
Via Goldman and ZH