Markets across various asset classes are bracing for the release of December’s US jobs report, an economic indicator that could affect markets on all fronts: equities, bonds, and cryptocurrencies. Expectations are mixed, with investors anxiously eyeing the data to gauge the Federal Reserve’s next moves.
As revealed by The Kobeissi Letter, prediction markets estimate 183,000 jobs were added to the US economy in December, with a 40% chance that the figure surpasses 200,000.
Today marks the final jobs report of 2024.
Prediction markets currently expect that 183,000 jobs were added to the US economy in December, per @Kalshi.
Furthermore, there's a 40% chance that 200,000 jobs were added for the month.
The unemployment rate is expected to remain… pic.twitter.com/1OkmxfjigW
— The Kobeissi Letter (@KobeissiLetter) January 10, 2025
The unemployment rate is projected to remain steady at 4.2%, though markets suggest a 50% chance of the rate edging higher.
Fed policy and Treasury yields on market watch
The Federal Reserve’s interest rate strategy remains a focal point as Treasury yields climbed ahead of the jobs data release. The 10-year yield rose to 4.72% this week, driven by concerns over sticky inflation. A stronger-than-expected jobs number could further pressure equities, with analysts predicting the S&P 500 could drop by up to 1% if payrolls exceed 200,000.
Wall Street analysts note that higher unemployment could intensify pressure on the Federal Reserve amid resurging inflation fears.
November saw 227,000 jobs added, significantly higher than October’s upwardly revised 36,000, reportedly impacted by Hurricane Milton and a Boeing strike.
Despite these fluctuations, the average monthly job additions through November were approximately 180,000—slower than pandemic-era highs but aligned with pre-2020 trends.
Peter Cecchini, director of research at Axonic Capital, commented on the sensitivity of markets to economic data, saying, “Equities are pricing in near perfection, but inflation has been far stickier than the Fed admits.”
A JPMorgan Chase trading desk note, cited by Bloomberg, also signaled potential market declines of 0.5% to 1% if job growth surpasses the pre-January 10 predictions.
Stock and bond markets react to data shifts
Stock and bond markets experienced volatility earlier this week following the release of the JOLTS job openings survey, which indicated a stabilization in the labor market.
The S&P 500 has rallied in recent months, but rising yields are adding to equity market pressures. ING analysts suggested a weaker-than-expected jobs report, below 150,000 new jobs, might halt the upward trajectory of Treasury yields.
“Payrolls are always a pivotal report, but we need to deviate materially from consensus to have an effect this time around,” said ING’s Padhraic Garvey.
Reuters reported that Japan’s Nikkei fell 0.9%, contributing to a weekly loss of 1.6%, while the MSCI Asia-Pacific Index outside Japan dropped 1.2%. Rising US bond yields and dollar strength weighed heavily on international markets.
The US dollar index, which tracks the greenback against major currencies, is poised for its sixth consecutive weekly gain, marking the longest winning streak since 2023. During Asian trading hours, the dollar strengthened against the yen and the British pound, with the latter hitting a 14-month low amid economic uncertainty in the UK.
Cryptocurrency market pressure heats up
The cryptocurrency market also felt the heat ahead of the jobs report. Bitcoin dropped below the $95,000 mark during early Friday trading, pressured by rising bond yields and expectations of strong US employment data.
Major altcoins also saw declines, with Ethereum falling 5%, XRP down 4%, and Solana slipping over 10% in the last week. The global crypto market cap also settled at $3.3 trillion, witnessing little to no gain in the last two days, per Coingecko data.
“Bitcoin remains range-bound as investors remain cautious. Bulls must step in to see price action,” noted Edul Patel, CEO of Mudrex. Meanwhile, Avinash Shekhar, CEO of Pi42, characterized Bitcoin’s drop to $92,000 as “short-term noise” unlikely to affect the coin’s long-term momentum in the coming months.
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