US: August NFP fully closed the door on the chance of a September taper announcement – Wells Fargo

The US dollar extended losses after the US official employment report showed a net gain in jobs of 235K, below the 750K of market consensus. According to analysts at Wells Fargo, August’s job numbers fully closed the door on the chance of a September taper announcement.

Key Quotes: 

“It strikes us as highly unlikely the FOMC will announce a taper of its asset purchases at its September 21-22 meeting. Today's miss on nonfarm payroll growth will disappoint top Fed officials who have signaled that it would take a couple more reports of 500K-1M jobs per month in order for "substantial further progress" to be achieved. However, not all is lost. The monthly job numbers have been very volatile throughout the re-opening process, and it is quite possible August's miss will be offset by stronger numbers in September.”

“If September 21-22 is a no-go, this leaves November 2-3 and December 14-15 as the two remaining FOMC meetings of the year. We suspect both of these meetings will be "live" in the sense that a taper could be announced at either one. All year our forecast has been for a taper to be announced at the December 14-15 FOMC meeting, with the actual reduction in asset purchases occurring shortly thereafter.”

“If the jobs numbers rebound by November and/or the inflation data surprise to the upside, we think a November announcement is a real possibility. However, if job growth is just a few hundred thousand in September and inflation shows additional signs of slowing, we suspect the FOMC would wait just a bit longer to observe a couple additional employment reports between the November and December meetings. For now, consider it a coin flip, with data dependency much more important than it has been at any point this year.”