2024 Non-Farm Schedule

📅 What to look at in non-farm payrolls?

The non-farm payrolls report contains a lot of information about the U.S. job market. Key data include:

1️⃣ New non-agricultural employment:

  • A direct reflection of the state of the job market, higher than expected usually indicates a healthy economy, which may drive up the stock market and strengthen the dollar; lower than expected may indicate a weak economy, leading to a decline in the stock market and a weakening of the dollar.

2️⃣ Correction value:

  • Last month's data are often subject to revisions, which can have a significant impact on the market. If the previous data is revised upwards significantly, it may offset the negative impact of less-than-expected data for the month, and vice versa.

3️⃣ Unemployment rate:

  • A lower unemployment rate generally indicates good economic conditions, while a higher unemployment rate can indicate economic challenges. Changes in this number are relatively small compared to nonfarm payrolls, with a 0.2% fluctuation in either direction considered a large change.

4️⃣ Salary data:

  • An important precursor to inflation. Fast wage growth could lead to rising inflationary pressures, prompting the Federal Reserve to raise interest rates; slow wage growth could ease inflationary pressures. Traders closely watch this data to assess the future direction of monetary policy.

5️⃣ Labor Force Participation Rate:

  • The proportion of people who are eligible and willing to work to the total working-age population is used to assess the true state of the job market. Even if the unemployment rate is falling, if the labor force participation rate is also falling, it may indicate that more people are leaving the labor market, which is not necessarily a sign of economic health.

🔍 How does the Federal Reserve view non-farm payrolls:

The Federal Reserve has a dual mission of achieving full employment and price stability. However, these two tasks are often contradictory: a hot job market will lead to higher inflation, while policies to reduce inflation will often lead to a worsening of the job market. Therefore, in addition to non-agricultural population data and unemployment rate, the Federal Reserve also pays special attention to wage data.

📉 Non-agricultural market influence:

After the release of non-agricultural data, financial markets will react quickly and violently. If the actual published value is far from the expected value, it may cause significant fluctuations:

1️⃣ Foreign exchange market:

  • US Dollar: Strong non-farm payrolls data usually pushes up the dollar; weak data may lead to a weakening of the dollar.

  • Major currency pairs: When the U.S. dollar strengthens, currency pairs such as EUR/USD and GBP/USD will fall; when the U.S. dollar weakens, these currency pairs will rise.

2️⃣ Stock Market:

  • US stocks: Strong non-farm data may boost stocks, but it may also raise concerns about interest rate hikes. Weak data usually has a negative impact on stocks, but it may also raise expectations of loose policies.

  • Various industry sectors: When non-agricultural data performs well, cyclical industries benefit; defensive industries perform mediocrely.

3️⃣ Bond Market:

  • U.S. Treasury yields: Strong non-farm data typically leads to higher yields; weak data may lead to lower yields.

  • Bond prices: move in the opposite direction of yields.

4️⃣ Commodities:

  • Gold: rises when non-farm data is weak; falls when the data is strong.

  • Oil: Oil prices may rise on strong data, but may fall if it triggers expectations of rate hikes.

5️⃣ Other assets:

  • Cryptocurrencies: Strong non-farm payrolls data could have a negative impact on major cryptocurrencies such as Bitcoin as they are often viewed as a hedge against inflation or economic uncertainty.

📊 Key Notes:

The non-farm payrolls report has a broad impact on major asset classes by influencing investors' expectations of the health of the economy and the Fed's policies. Financial markets are affected by multiple factors, and the market trend may not always conform to theory. The initial market reaction is often very volatile because it is driven by the overall non-farm payrolls data.

For example, in October 2023, the US non-farm data for September far exceeded expectations, and the data for the previous two months were significantly revised upward, which led to a sharp increase in investors' expectations for the Fed's interest rate hikes, and the market once staged a "double kill of stocks and bonds". But then the market reversed dramatically, with US bond yields gradually giving up more than half of their gains, the three major US stock indexes turning positive during the session, and technology stocks rising across the board.



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