Macro week ahead – US jobs data on deck

Trump’s SOTU and tariffs

A light data calendar last week left markets at the mercy of headlines. US politics, Fed speak, and a blowout earnings report from Nvidia (NVDA) all competed for attention.

One of the most consequential stories was US President Donald Trump’s State of the Union address, which set the tone early in the week. Unfortunately (or fortunately), this aired in the early hours of the morning for me here in England, but I caught the highlights. 

The President’s address was heavy on economic self-congratulation and record highs in Stock markets, yet tariffs were the primary focus, particularly after the Supreme Court’s 6-3 ruling striking down his reciprocal tariff regime. 

Trump referred to the decision as ‘very unfortunate’, though he insisted existing trade arrangements would hold under alternative legal authorities. He had already invoked Section 122 to impose a 10% global tariff, which took effect last Tuesday, and hinted that the figure could rise to 15%. Whether that’s bravado or a warning shot remains to be seen.

Fed speak: Patience, patience, and more patience

On the policy front, it was also a busy week for Fed officials, who largely delivered a unified message: the Fed is not in a rush and remains data dependent. 

Boston Fed President Susan Collins and Richmond Fed President Thomas Barkin both stressed the need for clearer signs of disinflation before endorsing further rate cuts. Kansas City’s Jeffery Schmid and St. Louis’ Alberto Musalem echoed that caution. However, I thought Musalem delivered perhaps the most balanced outlook, stating that inflation and labour market risks are broadly offsetting each other, though a softening in hiring could tip the scales. 

Although the subject of Fed independence remains a talking point, and despite Schmid arguing that the Fed’s current structure is robust enough to keep politics and policy separate, the one curveball last week came from Atlanta Fed President Raphael Bostic. In a farewell essay ahead of his retirement, he directed the spotlight to Fed independence. 

When the market feels independence is eroding, Bond investors demand a term premium to compensate for elevated risk, usually leading to a steepening yield curve. This can also be accompanied by a weaker USD and a rotation into safe havens, such as Gold.

Nvidia delivered and the Stock sold off

Nvidia’s Q4 FY26 earnings report was a big one, and the company did not disappoint. Both the results and guidance came in solid. Revenue jumped US$68 billion, easily surpassing the US$66 billion forecast, with data centre revenue rising 75% YY to just over US$62 billion. 

Importantly, the company’s guidance noted that fiscal Q1 FY27 revenue is expected to come in at US$78 billion, considerably above the US$73 billion estimate. However, despite this, the response from investors was underwhelming – I am not entirely sure why, given the results. There were a couple of narratives circulating in financial media, but, for me, it felt like a classic case of buy the rumour, sell the news, compounded by the Stock’s price touching gloves with range resistance.

The week that is

Market participants welcome a busy data slate this week. While the geopolitical situation is front and centre, the macro focus will be on US jobs data.

Ahead of Friday’s US February jobs report, I will be keeping a close eye on the ISM manufacturing and services PMIs on today and Wednesday, respectively. While the headline numbers are important, I will equally be monitoring the sub-indices for prices paid, new orders, and employment. However, with the services component accounting for around 80% of GDP output, this is the more influential report.

The February ADP employment report is also released on Wednesday. Although the correlation between this print and Friday’s government employment statement is low, it can be market-moving and may alter how traders expect Friday’s number to come in. 

Undoubtedly, Friday’s report will be important for the markets; they’re essentially wanting to see if January’s blowout report, which surprised to the upside across all key measures, is repeated in February. I think this report will take on extra importance, given recent Fed speak – particularly from Governor Chris Waller, who stated that he may be open to holding the target rate steady if jobs indicate a more ‘solid footing’. 

Consequently, a solid beat would likely underpin the USD as investors price out rate cuts; conversely, a weak print would likely have the opposite effect. The jobs report will need to be markedly disappointing to bring March and April’s meetings back into the Frame. Money markets are fully pricing in a July 25-bp rate cut, though June remains a strong possibility at around 70% odds (-15 bps of easing implied).