US NFP in the limelight today - BBH

Research Team at BBH, suggests that attention turns to the US employment data today, which will overshadow the Canadian jobs report released at the same time. 

Key Quotes

“Outside of the ADP data, other pieces of data pertaining to the US employment were favorable.  The one cautionary note is that in recent years, the market has consistently over-estimated job growth in September.  The surveys suggest the median guess is around 170k, but we suspect it has crept higher.  Other details from the report will also be important, like hourly earnings and average hours worked.

A significant challenge is perhaps globalization.  Perhaps the challenge is technology.  Those with a college degree have a 2.5% unemployment rate.  The unemployment rate is more than twice as high for high school graduates.  The unemployment rate for those without high school is almost the sum of the other two (~7.5%).  That education/economic dynamic has become a political force to be reckoned. 

Between tradition and the lack of updated forecasts, we think the bar to a November hike is very high.  Even if our suspicions that the US delivers a robust jobs report are accurate, there are still two other jobs reports that Fed officials will see before the December meeting.  There is clearly scope for the market to price in a greater chance of a rate hike before the end of the year.  The issue is whether it does so today.  In our recent commentary  in the emerging markets as well as out profiles of major countries (EMU, Japan, Canada, Norway and Sweden), we have shown how interest rates appear to be re-emerging as an important driver.”