Nonfarm Payrolls Number Is Likely Enough To Keep The Fed From Announcing A Taper This Month

September 7, 2021 09:20 AM
On Friday, August job growth disappointed at 243,000
The door is wide open for job growth to rebound in September
Ironically, the U.S. Dollar has gained ground overnight
Blue Line Futures Market Update

Blue Line Futures Market Update

Last Week's Close

E-mini S&P 500 Futures (September): Settled at 4534.50, down 0.75 on Friday and up 29.00 on the week

E-mini Nasdaq-100 Futures (September): Settled 15,651.50, up 50.50 on Friday and 225.00 on the week

U.S. benchmarks are essentially flat coming out of the holiday weekend. On Friday, August job growth disappointed at 243,000, but Treasury yields rose as the Unemployment Rate slipped to 5.2% and Wage Growth surged. The Nonfarm Payroll report certainly gave a lot to unpack: although August can be a wonky month, the impact from the rise of Covid-19 cases due to the Delta variant was clear. 

The headline number is likely enough to keep an already patient Federal Reserve from announcing a taper at their meeting later this month. In fact, no taper coupled with the rise in Wage Growth stokes inflation, which helps explain the move in Treasuries. Furthermore, the door is wide open for job growth to rebound in September as 2 critical unemployment benefit programs expired yesterday.

Don’t miss our weekly Top 3 Things to Watch this Week, released on Sundays.

Today’s U.S. economic calendar is quiet, but the Treasury begins a trio of auctions with $58 billion 3-year Notes at noon CT. Tomorrow, we look to the closely watched JOLTs Job Openings figure. Last month, it showed a record 10.073 million jobs were vacant. Expectations for tomorrow are right at the 10 million mark.

Last night, August Trade Balance data from China strongly indicated a healthy global economy despite the rise in Covid-19 cases. Both Exports and Imports exceeded expectations at 25.6% versus 17.1% and 33.1% versus 26.8%, respectively. The Eurozone also revised higher their Q2 GDP to 2.2% QoQ versus 2.0%. 

Ironically, the U.S. Dollar has gained ground overnight. This could be a sign that market participants are taking August’s job growth with a grain of salt due to mounting October expectations. The better data around the globe also helps ease the Fed’s mind in tapering before the year’s end.

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