Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
Access both platforms from your single Saxo account.
This is the most important chart ahead of the NFP report
Christopher Dembik
Head of Macroeconomic Research
Summary: The whisper number for today's jobs report is dropping fast. Based on the latest ISM employment index, we look for a big miss.
The official estimate for September NFP report is 146,000. Based on the ADP report and the latest ISM employment index (which has a very decent correlation of 0.6 with MoM NFP change), we look for a big NFP miss today.
If our forecast is right, be ready for a very negative market reaction and higher pressure on the Fed to cut rates this month. Ahead of the NFP release, the implied probability of Fed rate cut in October is standing at 87% on the back of the ugly ISM manufacturing index and ISM Non-Manufacturing index.
On the top of that, it’s never good news when Fed hawks become dovish. Look at what Fed’s Kaplan said yesterday confirming that he is inclined to take action if economic deterioration continues: “I would rather use adjusting the Fed funds rates…when it matters, which I think is doing it sooner rather than late”.
To conclude, this is a quick sum up of what we have learnt this week on the US economy:
- The strong consumer narrative is done.
- There is obvious contagion from manufacturing weakness to the service sector.
And, we will probably have the confirmation in a couple of hours that risk of higher unemployment is on the rise due to high business uncertainty related to trade war and fear of recession. This is the perfect set up for risk aversion and higher XAUUSD.
Latest Market Insights
Quarterly Outlook 2024 Q3
Sandcastle economics
-
-
Bonds: What to do until inflation stabilises
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.
-
Equities: Are we blowing bubbles again
Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.
-
FX: Risk-on currencies to surge against havens
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.
-
Commodities: Energy and grains in focus as metals pause
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)