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And Don’t Forget The Jobs Report

Usually the jobs reports is among the most watched market catalysts but this month it was dwarfed by the election and the Fed.

But that doesn’t mean the report – due to be released Friday before the bell – will be any less potent.

WHAT TO WATCH

Largely the Street expects to hear that U.S. employment increased in October for the first time since May. According to economists polled by Reuters, on average the Street expects the jobs report to show a gain of 60,000 jobs in October, compared with September's loss of 95,000 jobs.

Breaking the numbers down a bit - government employment likely fell again in October, weighed down by continued layoffs by state and local governments grappling with tight budgets.

However the private sector is expected to be strong – at least on a relative basis - with another report out earlier in the week showing gains of 43,000.

Those gains however are not enough to generate a meaningful shift in the labor market. That should leave the unemployment rate at an elevated 9.6 percent in October.

However, on a somewhat positive note, layoffs are down sharply. “Job cuts are the lowest they have been in a decade, due in part to a slowly improving economy; if not the fact that many employers have basically cut their workforces to the bare minimum,” John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.

MARKET IMPACT

In the past a weaker than expected jobs report has pushed stocks higher with investors taking the results as a signal that the government would stimulate the economy further.

However, this time financial markets have largely priced in further monetary policy – because of the Fed statement released Wednesday.

If the report is stronger than expected, it could boost the greenback and stocks. For U.S. Treasuries, the risks may be skewed toward a hefty sell-off and a sizable jump in yields if investors rotate out of bonds and into higher risk assets.

Wnat more analysis. Check out what Deutsche economist Joe LaVorgna tells the desk. Watch the video now!




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