European stocks decreased on Friday, 5 January, as the market anticipates the release of nonfarm payroll data, predicted to have risen 175,000, and US job numbers. The data closing 2023 is predicted to show a cooling labour market.
US Jobs report and nonfarm payrolls data outlook
The dollar set itself on track for its longest winning streak since September 2023 and the 10-year US Treasury yield rose one basis point at 4.01%. The US data due to be released later today will contain information regarding rate cuts from the Federal Reserve, with market sentiment predicting good nonfarm payrolls data.
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After employment figures are made public, swap traders may predict a 65% chance of rate cuts from the Fed, according to a Yahoo Finance! report. More specifically, the report suggests the Fed will bring further cuts in March of this year, with the 10-year US yield sitting as high as 4.15%. Traders are also concerned with euro-zone inflation, which will shape European Central Bank Policy (ECB).
Jun Rong Yeap Source: LinkedIn
Jun Rong Yeap, a strategist at IG Asia, noted:
In the lead-up to the upcoming US job numbers, sentiment is back to wait-and-see. We may have to see a substantial weakening of the US labour market to justify market pricing of a rate cut as early as March.
In November 2023, US unemployment fell to 3.7% after the US economy added approximately 199,000 jobs. Investors continue to hope that the Fed achieve its “soft landing” this year, where inflation lowers to the 2% Fed goal, helping to balance trading and the economy after a rocky 2023.
