When the November employment report is released on Friday, it could have a huge impact on stocks and bonds alike. That's because it will not only give investors a clue about the strength of the economy. It also is expected to give another indication of when the Federal Reserve should begin to taper its quantitative easing program.
"It's the paramount number that the Fed is looking at it," said Jeff Kilburg of KKM Financial. "Therefore, it's what we're looking at."
With the Fed looking for the chance to reduce the pace of its $85 billion monthly bond-buying program, the November number could show the type of economic strength that will persuade it to finally take that long-awaited step.
"It always seems as if the next employment report is the most important one we have had in some time, and it certainly feels that way again, given the fact that the Fed continues to contemplate tapering asset purchases," Deutsche Bank chief U.S. economist Joseph LaVorgna wrote in a Wednesday note. "Another month of solid job gains increases the probability that policymakers will taper when they meet at the December 17-18 FOMC meeting."
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After all, the Fed's well-known cliché is that its policies are "data-dependent." The minutes from the Federal Open Market Committee's October meeting said that FOMC members "generally expected that the data would prove consistent with the Committee's outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months."