Previewing Today's Nonfarm Payrolls Number And Key Market Levels

Tyler Durden's picture

What the banks are expecting:

  • HSBC 181K
  • JP Morgan 200K
  • Goldman Sachs 200K
  • Barclays 225K
  • Bank of America 230K
  • Citigroup 240K
  • UBS 250K
  • Deutsche Bank 275K

RanSquawk has more:

  • Friday’s nonfarm payrolls release is expected to show a continued rejuvenation of labour market activity that was weighed on by adverse weather during the winter months
  • Today's reading is not expected to alter expectations of another USD 10bln taper by the Fed when they meet later this month
  • This month's unemployment reading will be the first since the FOMC dropped its 6.5% unemployment threshold for the first Fed fund rate rise in favour of “qualitative” measures

The vast majority of NFP forecasts lie around the 200k mark, with the unemployment rate expected to decline to 6.6% from 6.7%. Because of the weather effects seen over the winter months, added attention is expected to be given to the components measuring hours worked. According to last month’s report, 6.9mln workers experienced reduced hours in February, the highest for that month since 1977. The importance of such data has been highlighted by the Fed in recent weeks after the FOMC dropped its 6.5% unemployment threshold for consideration for the first Fed fund rate rise, in favour of “qualitative” measures. It is widely viewed that the Fed remain on track to end their bond buying program this fall, as noted by Chairwoman Yellen, and as such it is seen as unlikely that today's number would prevent the Fed from another USD 10bln taper when they meet on April 29th-30th.

In terms of comparable data points, Thursday’s ADP employment change was broadly in-line with consensus at 191k (exp. 195k) and the previous reading was revised significantly higher to 178k from 139k. However, ISM employment components have been mixed. February’s NFP reading of 175k (exp. 149k) brought the six month average up to 177k, and the four-week moving average for weekly initial jobless claims is 318k, just above the postrecession low of 315k.

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Those who will look to actually trade the NFP print (we hope you have very fast, very collocated servers), here is Bank of America's chief techniciian MacNeill Curry with the key market levels to watch. Spoiler alert: everything is bullish for stocks, bearish for rates. And of course, sell gold. After all the market "isn't" rigged.

Ahead of NFP, we are bearish Treasuries and gold, bullish S&P500 futures, and looking for a top in €/$. Meanwhile, the $/¥ break of 103.76 keeps the immediate focus for the top of the YTD range trade on 105.48, before renewed stalling.

US 2s:

Bearish. Bullish momentum divergences warn of a maturing yield rise. However, look for a yield top in the confluence of support at 48.8bps/52.1bps. Bulls need a break of 41bps to gain control. 

US 5s & FVM4:

Bearish and short FVM4: The break of 1.777% (Jan-09 high) says the long-term bear trend is resuming for 2.025%/2.055% (117-065/116-240 in FVM4) and beyond. Back through 1.661%/ 119-067 indicates stalling. 

US 10s: 

Watching key support at 2.821%. A close through says the bear trend is resuming for 3.007%/3.049% and beyond. Bulls only gain control on a close below 2.608%.

US 30s:

Bearish. The reversal from 3.461%/3.504% targets 3.763%. Above here exposes the Jan 2 high at 3.996%. 

US 5s30s:

THE TREND IS FOR FLATTENING. Steepening is temporary. While a steepening move could extend to 194.4bps/196.3bps, this must be faded for 146bps. 

S&P500 E-mini future June contract:

Bullish. The ESM4 bull trend has resumed, targeting 1906.25, ahead of 1930. Back below 1873.00/1868 warns of stalling and bears need a break of 1855/1850.

€/$:

Topping. A medium/long-term top is unfolding against 1.3833/1.3975. However, there is formidable support between 1.3688/1.3602. Risk of a decent bounce from here. Bears should wait for a close below said support before acting.

$/¥:

Bullish in range. The break of 103.76 keeps the immediate focus higher for the 2014 highs at 105.48. Below 102.69/65 means a top and turn for 101.14/100.77

Spot Gold:

Sell the bounce. Momentum points to a near-term bounce from the 1267 pivot zone. However, strength is a selling opportunity for the 9m range lows at 1180/1186