US Non-Farm Payrolls **LIVE**

Okay, testing, testing, 1, 2. Just gonna wait for people to get online. Just gonna welcome people to the session, get everyone back online. First live one that we've done, I think, for 2022. So I hope everyone is doing well. Um, let me know in the chat on YouTube with a comment if you can see and hear me okay. Still got about 5 minutes until payrolls hits, so hopefully we can have a quick scan over that and see what's going on. Joshua, hope you're well. Happy New Year to you. Okay, I'm just gonna share my link with some of my colleagues. One sec, and then we're ready to rock and roll. All right, well, look, let's have a quick look at payrolls. And yeah, wanted to jump on, um, well, I'll give you the breakdown, then I'll give you my overall assessment and take of what I think we might see today. And we'll have a quick look at the charts, we'll obviously look at the live reaction and so forth. But first things first, just having a quick run through with payrolls. As ever, don't forget that that there is more than meets the eye. It's more than just one number, albeit that will be the first input, first output in terms of the actual reaction that you're likely to see. That meaning then that you could see quite an explosive initial kind of more algo-led move, and then the subsequent reaction effect is really determined by how out of line this figure is. We've got a range on the headline from -400K to plus roughly $400K. And then we're looking out for the unemployment rate, expected to remain static as the same as the previous month at 3.9%, range 3.7 to 4. We've then got average hourly earnings, which obviously will be very closely watched as well in context of the fact that inflation, a real key consideration of course around the Fed's idea of tightening more rapidly through 2022, that's expected month on month at 0.5, year on year at 5.2%. Couple of things then. I was just looking at the primary dealer guesses for nonfarm payrolls. It's always good for a bit of a laugh, to be fair. But this is the range on the street of HSBC is kind of the most bullish. They're looking for a top line figure of change in nonfarms at 225, followed by Credit Suisse at 200. The most bearish, I think this is NatWest Markets presumably, at -350, and Goldman's and MS down at 250 and 215 respectively. Remember, the median consensus is for a positive number, but don't forget we have had a couple of things to, to factor in here, namely of the, uh, indicators that we see in the run-up to the labor report. So the ADP employment report specifically, which came out earlier in the week, and of course that came in at 301, negative 301. And as you can see here, out of those last 12 readings that was a distinct break from the trend. Now, as you've probably heard, a lot of economists, analysts have been talking about, and definitely is really important for interpretation of today's payroll figure, is this. And this is looking at the current COVID case rate pattern nationwide in the US. And as we know, with non-farm payrolls, it captures a survey reference period, and that pretty much came in for today's report right at the peak of the virus, the coronavirus. Obviously they were already experiencing a Delta wave, Omicron on top, and so definitely the weakness in the employment report for the month of January can definitely be explained away by the fact that forward-looking, we know where the direction of travel generally for inflation, and we know the direction of travel for COVID cases now is is a rapid deceleration. You can see this drop-off that we've had in the second half of January, the bulk of which is not captured in this report we're going to hear of. And so while ADP understandably was weak and saw service sector jobs the most hard hit— leisure, hospitality, all getting hit by the back of the idea of short-term increase in restrictions given the flash increase that we had in COVID cases— That's really in the rearview mirror now, and the markets are forward-looking. So quick thing before we go then into these numbers, I'll switch back over to my charts so we can hear the reaction, see it live. But don't be spooked by a downside number. Look out for the combination of that figure to where it lies on the, on the spread of range of expectations in combination with the unemployment rate. And perhaps even more importantly, the wage data is going to be key to determining the actual ensuing price action after the initial spike. All right, so we've got a minute, just under a minute to go. You'll be able to hear the squawk. So I'm plugged into Newsquawk, is my recommended squawk feed. I'm going to put them on now and hear the data as it comes out. They'll give the countdown and they'll call the numbers as they appear.

The economic change forecast at -117.5. Lithuanian Prime Minister says Baltic Energy Company is working closely together to prepare for the possibility of Russian gas supply interruptions.

Okay, I've got the numbers visible as well so you can see it and hear it at the same time.

10 seconds. 4.67, that's 4.67, but expected of 1.50 for the headline. The unemployment rate, that's at 4%, but expected 3.9. The headline, that's revised to a 5.10%. The earnings components month over month at 0.7%, public spending 0.5%, year over year also firm at 5.7%, public spending of 5.2%. Then for the workweek hours, 34.5%, public spending 34.7%. Labor force participation, that rises to 62.2% from 61.9%.

Okay, I'm going to turn the squawk down. I'm just going to go straight with it. So as you can see here, the head Headline change in non-farm payrolls at 4.67. So that's above the top end of expectation, but also the average hourly earnings, the month on month at 0.7, 0.2 higher than expected, the year on year at 5.7. So strong headline change in non-farm plus strong wage data equals short term the Fed are going to have to accelerate their tightening. Dollar strength, yield strength, gold down, equities down. Is kind of the initial take here. So here's, here's T-notes. So this is yields popping higher. In combination, the dollar has also strengthened, albeit fairly moderate. And that's what's explaining that little bit of downside pressure in the euro, mirrored as well in cable. So you can see yields here, T-notes busting through the S1 as they continue to be kind of this dual-fold mechanism of job creation being solid irrespective of the Omicron situation and the case rates in the US, it's very bullish for the labor market in combination with wages, which is already feeding into a high inflationary situation. So gold equally would not like this type of scenario. This talk of then, although the Fed have insinuated 7 rate hikes, that's a possibility. This makes it one more step of reality by looking at this data on a superficial level that we've just seen. So gold under some quite significant selling pressure here. Just targeting now down towards the, the pivot level, which is also a dollar off the psychological 1800 level as well there. So gold, T-notes under pressure, cable session lows, equities likely not to like this either. NASDAQ, uh, at session lows as we speak. So we're pretty much coming down to the base of where we were trading in the futures market in the NASDAQ from where we were before it got bailed out by the Amazon earnings after the closing bell. So target now down on, on downside would be down at 14,456. We're trading about 50 points above that at the moment in the NASDAQ. Probably the NASDAQ tech stock's going to be, as we always see, the most sensitive to yield expectations and fluctuations in, um, the timeline for the Fed. But yeah, similarly, it's not good for any of these US indices at the same token. So keeping an eye on the S&P, we're just testing down at the low that we saw late European morning. So just going to switch this over to a 60-minute chart. If we see any breakdown of there, the next area of more significant support perhaps down at this kind of area, 4444. You can see it was these previous highs on the 26th and then low on the break high that we saw at the beginning of the, the week. Anything below there, S2. And then looking at 4400, which was areas of support that we had back on the afternoon of the 31st. So yeah, overall first look at this, wages back on the rise, average hourly earnings at 5.7% year on year. That is the fastest gain since the summer of 2020. And yeah, overall initial interpretation here is this is going to kind of fuel the flames of where the market has been heading and likely to support the narrative of the Fed getting increasingly more hawkish Yields reflecting that accelerating dollar bid weighing on the major dollar-based currency pairs, and equities are not going to like that. Neither is gold. I'm just having a quick look on the headlines to see if there's anything else noteworthy. Yeah, the average— the US average earnings year-on-year previous figure of 4.7% was also revised up to 5%.

Has risen to 33.37, 138 basis points seen by year end, which is a little bit of a marginal uptick from the 1.29— is a jump from the 1.216 we did see ahead of the release.

Yeah, and just for the sake of completing the asset classes, if you like, Bitcoin as well not liking that. And that's been very typical. Cryptocurrencies, it's been a bit of a bloodbath since really the beginning of the year. And we generally seen quite a correlated pattern between some of the major cryptocurrencies and that of US indices. And they're really both, although there's other smaller fundamental developments that are underpinning some of the movement, the broader macro picture has also been weighing on the crypto space, which is the Fed tightening has typically resulted in downside pressure for Bitcoin. And we are seeing that Bitcoin futures here just dropping from around $37,900 down to around $37,500 in pretty, pretty rapid fashion. So yeah, equities, the Nasdaq then, as we were just looking at has briefly tested. You can see there a lot of short-term speculative traders not looking to really get too aggressive. Had a little flash test of that low that we had last night, and then we're seeing a bit of a bounce back up, bit of whipsaw price action of a 40-point range on that initial test. Really, can we break through there? Well, I'd be looking to really look at other asset classes. Would want to see a bit more of a uniform momentum push So a bit more deeper continuation of the T-note move. Gold finding a bit of a hiatus at the pivot level, as we were just looking at a moment ago. I'd really want to see that break through to get a bit more pace, um, and that to follow through in dollar appreciation to feel more conviction on any breakout here on the NASDAQ. But perhaps the NASDAQ is the one to watch that could then facilitate the breakout of those other products because the The Nasdaq is quite sensitive to these rate changes. So yeah, the Nasdaq's coming back down to that level. So keep an eye on that Nasdaq. If that Nasdaq breaks and we do see— if it breaks— a quick rundown to those previous lows that were seen kind of midday on the 31st, then what you might see is a follow-through materializing some of the other products. So gold here, right on that pivot now, session lows again. What you'd want to see is a break in that NASDAQ with coinciding with the S&P breaking down through this area here from those previous highs in the 26 and that low there. So uniform break is going to add a bit more momentum to the move, and then you might start to see a bit more continuation in the direction for the likes of gold and T-notes. Yeah, I hope— otherwise, I know I haven't done a live session in a while, so I hope everyone is well. I've been trying to put out some different breaking pieces of news. So things like I did one on Facebook and the Bank of England and stuff like that. So if you are new to the channel, don't forget to subscribe, go back and check out some of those.

Um, also as well, if it's of interest, just while I'm here, suggest as that dust begins to settle on that US report, which was characterized by a large piece in the headline month on payrolls, a large revision to the prior strong earnings components, and a jump in the today for force participation rates. Remember, seeing Treasuries hold on to the downside, just above 127, where there is said to be much put interest. From a yield perspective, we're coming out 188.68. It did briefly pierce the high print seen on the 19th of January, 1.1920, to make a new high of 1.1930. Equities, again, the price action slightly more contained, but there were some downticks seen in the wake of the release. Whilst in the FX space, you see the dollar prints a session of 95.625. I've pulled back closer to the 95.50 mark now. Dollar yen, that's firmly below 115. And Disney and Greenback weighing on the euro and sterling. Cads, that was, that was a double hand blow given the unexpected US jobs report, below expectations Canadian report. Dollar cad currently at 127.60.

Cool. Yeah, that was the squawk just wrapping things up. And with that, I'm actually going to just just come off this feed now. So yeah, just wanted to jump on just to catch some of the initial reaction. Um, so I wish everyone a good rest of the session. At the moment things are holding up relative, but gold perhaps the standout. You can see there breakout now in gold through that pivot in $1,800, trading very quickly down $3 there on that move. So now that gold's through there Yeah, I'm not sure how strong my conviction would be on the continuation of that because the Nasdaq's bounced quite firmly and T-notes are off their low. So this could be more of a quick, quick run down rather than a continuous push to the downside. But I guess we'll see. All right, well look, I'm actually coming off the feed, so yeah, short and sweet, but just wanted to keep it to the point on payrolls. So I hope everyone is doing well. Um, and yeah, thanks for logging in from Mauritius, Kuz Boss. Good stuff. Um, and I'll catch you guys next time. Bye.