Another downside risk warning from Friday’s NFP report

This GS post is here:

U.S. jobs report due Friday – Goldman Sachs previews nonfarm payrolls for January

TD Now analysts cite ‘temporary fallout from Omicron’ in search of -200K stock, adding that we see downside risk to our estimate of -200k.

  • Several Fed officials have already made it clear that they will view the weak data as temporary.
  • Additionally, we see upside risk to average hourly earnings, with an already strong trend likely to be supplemented by temporary Omicron effects related to payroll composition and length of work week. Our estimate of 0.6% m/m for hourly earnings implies 5.3% y/y, versus 4.7% y/y in December.
  • A weaker than expected NFP report would reinforce the recent USD selloff. It works through two channels: rates and risk. Risk sentiment would likely support easier financial conditions, especially if Omicron explains weak growth. That said, our dashboard shows the USD reaching oversold levels again, so we are using this recent pullback as a buying opportunity ahead of next month’s Fed meeting.


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