Now that the most anticipated Federal Reserve rate cut in history has come and gone, traders have immediately set their sites on the next meeting in September and whether or not there will be another cut in rates at that meeting. A key driver of whether or not rates get cut again is economic data like tomorrow’s Non Farm Payrolls report for July. Remember that last month’s report, which was sandwiched between July 4th and a weekend came in much stronger than expected setting off a market decline on fears the FOMC would not be as dovish as many investors had hoped. It’s also important to remember, though, that expectations for FOMC policy oscillated wildly in the weeks that followed as traders extrapolated every data point out to infinity. In other words, whatever the narrative is that comes out of Friday’s meeting, don’t expect it to last for long.
Heading into tomorrow’s report, economists are expecting an increase in payrolls of 165K, which would be a decline of nearly 60K from June’s stronger than expected reading. In the private sector, economists are also expecting an increase of 165K, which represents a decline of 26K from June. The unemployment rate is expected to drop back down to 3.6%, average hourly earnings are expected to grow at a rate of just 0.2%, while average weekly hours are expected to be unchanged at 34.4.
Ahead of the report, we just published our eleven-page preview of the July jobs report. This report contains a ton of analysis related to how the equity market has historically reacted to the monthly jobs report, as well as how secondary employment-related indicators we track looked in July. We also include a breakdown of how the initial reading for July typically comes in relative to expectations and how that ranks versus other months.
For anyone with more than a passing interest in how equities are impacted by economic data, this July employment report preview is a must-read. To see the report, sign up for a monthly Bespoke Premium membership now!