What Economic Report can create the Most Volatility?

What Economic Report can create the Most Volatility?

The Nonfarm Payroll Report


What is the Nonfarm Payroll Reports?

Nonfarm Payroll comes out typically the first Friday of every month.  If the report is dramatically different than expectations, then there is the potential of extreme volatility.  For this reason many consider this the most important report of the month.  Remember volatility can be good for rates or bad for rates. 

Statistics from the nonfarm payroll also show which sectors are generating the most employment additions. The report shows large gains and losses among the sectors. The list of sectors from the report include professional and business services, health care, financial activities, mining, construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, and leisure and hospitality. This breakdown by sector is often used by stock analysts to predict which stocks and sectors have strong earnings reports.

The report also contains additional items such as the average work week and average hourly earnings. Wage growth is communicated with the report. Each month’s report may include revisions to previous reports.

The best month for wage growth is usually May with an average of 129,000 additional jobs. August is the worst month with an average of 69,000 additional jobs. The year 1994 was the best on record with 3.85 million added jobs. That year saw gains reported in every monthly nonfarm payroll report. In 2009, the job force lost 5.05 million jobs, marking the worst statistical year for the nonfarm payroll.

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Below are what the market expects, what happened, what was previously reported and markets imediate reaction:

 Friday, April 7, 2017     
8:30 AMUnemployment RateMar4.70%4.50%4.70%High
8:30 AMNon-Farm PayrollsMar180K98K235KHigh
8:30 AMHourly EarningsMar0.30%0.2%0.20%High
8:30 AMAverage Work WeelkMar34.434.434.4High


Fri, Apr 07 9:09 AM Pre jobs data the 10-yr yield was 2.31%, then hit 2.26% after the weak numbers, now back at 2.31%.
Fri, Apr 07 8:54 AM S&P futures turn modestly negative.

8:51 AM  3.5% Fannie Mae 30-yr coupon up 16  bp at a price of 102.81 up 19 bp when rates were set yesterday at 10:00 am Open 102.75 High 103.06 Low 102.75 (Over $102.72) R2

Fri, Apr 07 8:50 AM MBS now off best levels of the session.
Fri, Apr 07 8:41 AM The Labor Force Participation Rate, or the share of American Americans over the age of 16 who are working or looking for a job, remained at 63%.
Fri, Apr 07 8:40 AM January Job growth revised lower from 238K to 216K.
Fri, Apr 07 8:36 AM February jobs revised lower to 219K from 235K.
Fri, Apr 07 8:34 AM The Unemployment Rate declines to 4.5% from 4.7%.
Fri, Apr 07 8:33 AM Average hourly earnings 0.2% vs 0.3% expected.
Fri, Apr 07 8:31 AM MBS push higher after the weak data.
Fri, Apr 07 8:30 AM 98K new jobs created in March, well below the 180K expected.



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