The Unemployment Report
Most investors know it as the “Unemployment Report”, the correct name of this report is The Employment Situation. This report is released by the United States Department of Labor usually on the first Friday of each month at 7:30 a.m. Central Standard Time.
This “RJOF Tip of the Week” will focus on two key sections non-farm payrolls and the unemployment rate. These two figures can sometimes set the financial markets abuzz.
Let’s start with the non-farm payroll number, which is defined the way it’s spelled. This area of the report weighs in on the amount of jobs created, not including farming jobs. The markets would like to see at least 150,000 non-farm payroll jobs created which suggest growth during a mature economic phase. Nowadays it seems that as long as the report comes in within the range of expectations in can be looked at as a positive. Looking back at the September 2, 2011 report, the August 2011 number was unchanged, meaning no new jobs were created. How did that affect the markets?
The T-bond continuous chart below shows a spike on September 2, 2011. The bonds rallied as the market broke consolidation and closed above 141-06. The concluding result of the non-farm payroll number was positive for the bond market.
On the other hand, you can see how the stock market closed on the lows of the day on September 2nd. This is a classic example of how the lack of jobs can affect the stock market in a negative way. Shown below is the E-mini S&P continuous chart with a clear indication of how the unchanged number resulted in a sell off into the close.
The other key element to this market sensitive report is the unemployment rate. Last months rate came in unchanged at 9.1%. Although the unemployment rate is .5% lower than August of last year it’s higher than the economy would like it to be. This Friday’s (Oct. 3rd) rate is expected to come out slightly higher than last month at 9.2%. Keep an eye on how the markets will react to this news.
Word to the wise, this monthly report can send a quick jolt to the market, so it is important to remember the first Friday of the month, especially if you are trading interest rates, indices and precious metals. Indices like a strong report, Interest rates like a weak jobs report, and metals are the flight to quality.
We hope you enjoyed our RJOF Tip of the Week. Please comment on areas of the market that you are uncertain of, and we will do our best to get an answer for you.
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Anthony Pickett
Tony started his career in the futures industry in 1994 as a runner at the Chicago Board of Trade. He was later promoted to phone clerk at the grain desk. While working in this position he developed a great appreciation for the futures industry.
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While advancing his career, Tony took a position at a retail order desk and was eventually promoted to the margin department. It was here that Tony had direct contact with retail clients, IB's and institutional accounts. In margins he was n.... Read More
