Asia Open: The trifecta of positive labour data points only raises the importance of Friday's Jobs report

US stocks are trading lower as Thursday brought more robust jobs data out of the US economy, underscoring the Fed's uphill battle to balance an overheating labour market.

Although ADP has not been the sharpest predictor for NFP, any incremental evidence that the labour market remains hot supports the Fed's hawkish impulse.

On Wednesday, the ISM Manufacturing survey suggested that industrial growth continues to slow. But the JOLTS report highlighted how any slowing activity is not translating into a reduction in labour demand -- a critical focal point of the Fed's effort to combat inflation. 

And overnight, we are seeing more evidence that the US labour market remains potentially too strong, thus reinforcing the Fed's dogged inflation-fighting stance in the Minutes, giving more weight to a 50pb hike in February and the higher terminal rate camp. 

Weekly jobless claims fell sharply to 204k -- near its lowest level since last May. Lower claims suggest fewer people are losing their jobs which, combined with the still-high job openings we saw in the JOLTs report on Wednesday, may indicate that employers will need to pay people more to entice them to work.

Friday's December Payrolls report provides a more definitive snapshot of the US labour market. Still, this week's

And despite all the hoopla, 10-year US Treasury yields are surprisingly unchanged. Hence, with the peak rate volatility approaching alongside the probable apex in inflation, growth volatility will likely be the primary driver of risk sentiment. Although in this environment, it is highly doubtful investors see any need to move out on the risk curve amidst a heightened focus on the Fed and inflation-related catalysts.

In other assets, the US dollar was more robust as the risk-off tone sent traders dialling for dollars unwantedly. But given the still-elevated levels of inflation and inflation risk, institutional investors are likely looking for further rebalancing in the US labour market before jumping into 2's 10's"steepeners," and full-on G-10 dollar selling. 

Oil clawed back lost ground on improving business sentiment in China's Services sector, which complimented existing optimism around the economic reopening and pro-growth policy commentary. And despite a pervasive risk-off tone in US markets and a stronger US dollar limiting a full-on price recovery, Oils were supported by a more petite inventory build than expected. 

Short-term pain for long-term gain. 

Oil prices got off to a weak start to the year as US recession concerns amid a hawkish Fed are currently outweighing China's reopening optimism. Still, we think that changes and expect prices to rise tangentially to mainland mobility gradually returning to trend.