Waiting on A Big Economic Number

We all know that tomorrow the monthly employment report for December will be released.

Is it likely to be meaningful to markets? No, I don’t think within a reasonable range it will be meaningful for longer than 2 hours–then the stock market will move higher.

But really–the expectation is for 160,000 new jobs being created in December. ADP showed over 202,000 new jobs in their report on Wednesday–of course no one really pays much attention to ADP. Just the official government report has power to move markets–occasionally.

Of course I have no idea what the number will be, but any huge outlier number could move markets. By huge outlier I mean something like 50,000 on the low end or 300,000 on the high end. When the number has missed by a fairly large margin (20,000-50,000) recently there have been almost no reaction after an hour or two of digestion So tomorrow if the number is 50,000 nervous nellies will yell ‘recession’. If the number is 300,000 interest rates would move up by a few basis points and folks would yell ‘higher interest rates coming’.

In the end it is highly likely the stock market will end higher Friday and interest rates (measured by the 10 year treasury) will move in a tight range of plus or minus 2 basis points (from the current 1.86%).

4 thoughts on “Waiting on A Big Economic Number”

    1. Giuliber–don’t think too hard–conventional wisdom is we peak with this attitude–but the irrationality of it all can remain for a very long time–many months or even years.

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