Outrageous Predictions
Executive Summary: Outrageous Predictions 2026
Saxo Group
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US Jobs Report: What to expect?
Saxo Strategy Team
What: US Jobs Report
When: 13:30 GMT (14:30 CET)
Expectation: NFP Aug 165k vs 114k (July) and unemployment Aug 4.2%vs 4.3% (July)
How will market likely react? If tomorrow's Nonfarm Payrolls (NFP) report comes out stronger than expected, with job growth exceeding 165k and the unemployment rate falling to or below consensus at 4.2%, it is likely to be seen as a negative for those hoping for aggressive rate cuts. The unemployment rate is a key focus because the recent uptick is what triggered the “Sahm Rule”, defined as when the unemployment rate increases 0.5%-point from the previous 12-month low, which is a sign that the economy is moving towards a recession. The market is currently leaning towards expectations of a weakening labour market, which means that a better-than-expected jobs report could reduce the probability of large rate cuts this year.
A disappointing jobs report, with growth coming significantly below 165k or the unemployment rate remaining elevated, would likely prompt the market to price in a 50bps rate cut in September with additional significant cuts expected before the year’s end. A weakening labour market would bolster the case for deeper rate cuts, potentially triggering a bond rally. At the same time, equity markets could extend their selloff amid growing growth concerns, US dollar may come under further pressure amid heightened expectations of Fed rate cuts while gold could be supported as investors turn to safe-haven assets in response to heightened economic uncertainty.
The below shows our views ahead of the Nonfarm Payroll report.
The views above are not investment recommendations but potential moves that could happen depending on the outcome of the Nonfarm Payroll report.
Why does it matter? The Nonfarm Payrolls (NFP) report has become a key event for shaping market expectations of the Fed’s policy rate, as the risks between its growth and inflation mandates have become more balanced. In May, the market was pricing in just two rate cuts this year, but recent signs of labour market softening have pushed expectations to over four cuts. With the Fed closely monitoring the labour market for further signs of weakness, Friday’s NFP data will be critical in determining the trajectory of future rate decisions.As the chart below shows, unemployment has risen to the highest since October 2021, while job growth moderates.
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