US Nonfarm Payrolls look a little different today
Markets
Yesterday was your typical waiting game in the run-up to today much anticipated US payrolls report. Rotation forces remained at play on stock markets with the tech-heavy Nasdaq (-0.5%) underperforming against the industrial Dow Jones index (-0.1%), but also European equities (EuroStoxx50 +0.55%). Advanced peace talks in Germany resulted in cautious optimism both from the European (Merz) and the US (Trump) side: “a really far-reaching, substantive agreement that we have not had so far”. After Ukraine dropped its Nato membership demand over the weekend, yesterday saw progress in terms of European security guarantees, backed by the US. There’s still no breakthrough on the most thorniest issue though, territory concession. Moves on fixed income markets were small with a slight outperformance at the front end of the US yield curve. EUR/USD closed at 1.1769 from a start at 1.1735.
US payrolls look a little different today. In addition to the full November report, the Bureau of Labour Statistics will also release October payrolls data. The monthly survey of households, from which for example the unemployment rate is derived, will be released for November thanks to an extension of the collection period after the shutdown (which also cause today’s later-than-normal release) but such statistics couldn’t be retroactively collected for October so will be missing today. Consensus expects a combined job growth number of 50k for Oct-Nov today. Fed Chair Powell last week downplayed the number since he fears big downward revisions to numbers since April (average job losses of -20k instead of +40k; related to BLS’ companies birth-death model; final benchmark revisions come with Jan2026 payrolls report). Markets reacted to those dovish comments and suggest a preference to react on a weaker outcome, lifting odds of a continuation of the Fed’s normalization cycle in Q1 2026. The dollar is vulnerable for more losses (EUR/USD 1.1919 resistance) in case of an outperformance by short-term US Treasuries. For US equity markets, it could give some short-term relief if the focus switches from potential data weakness to the prospect of a more accommodative Fed stance. We keep a close eye on the unemployment rate as well. It has been steadily rising from 4.1% in June to 4.4% in September. A new uptick to 4.5% or even 4.6% won’t go unnoticed and implies that the SAHM recession indicator (3-month moving average of unemployment rate more than 0.5 ppt above low-point of the past 12 months) could be triggered soon. Apart from Oct-Nov payrolls, today’s agenda also features October retail sales and global December PMI surveys. The impact of EMU (& UK) numbers will be overshadowed by the US agenda from a market perspective. After today, November US CPI numbers (Thursday) and Q3 GDP data (Dec 23) are the ones to watch from a US perspective.
News and views
December Indian PMI surveys showed growth easing to a 10-month low even as output level continued to rise sharply. The composite out index slowed to 58.9 from 59.7, with both activity in the services sector (59.1 from 59.8) and the manufacturing output index (58.4 from 59.6) easing. Growth of new orders slowed at the end of the year, but remained noticeable. Growth in new export orders improved. At the same time, companies kept their staffing levels broadly unchanged amid a further easing of business confidence. Inflationary pressures were again muted. Input costs increased modestly, and at a pace that was only slightly faster than the near five-and-a-half-year low posted in November. Output prices also increased modestly, and at the second-slowest pace in the past nine months. The rate of inflation seen in December was weaker than the average across 2025 as a whole. The India rupee this morning continues to set record lows levels with the USD/INR cross rate surpassing the 91 big figure.
National Bank of Poland policy maker Henryk Wnorowski gave a rather mild assessment yesterday on NBP policy going forward. He indicated that it was unlikely that anything will change in monetary policy before March. However, for the rest of 2026 it didn’t rule out anything, but suggested the possibility of further rate cuts, perhaps even several steps. He deemed it very unlikely that the policy rate will decline below 3%. Other NBP members, including Governor Glapinski, recently suggested a higher level for the bottom of the NBP easing cycle (3.5% area). The National Bank of Poland since May reduced the policy rate from 5.75% to 4%. The zloty remains well bid with EUR/PLN testing the bottom of the 4.22/4.31 trading range.
Author
KBC Market Research Desk
KBC Bank
