Friday’s NFP result could prompt a 50bp rate cut by the Federal Reserve

A note from analysts at Citi says that “relatively small differences in Friday’s jobs reading could materially affect Fed policy.”

In brief:

• a headline non-farm payroll (NFP) of 125,000 with a 4.3% unemployment rate of 4.3% is likely to prompt a 50bp rate cut from the Federal Open Market Committee (FOMC) this month
• a 4.2% jobless rate, on the other hand, would see a 25bp rate cut

Citi analysts note the shift of focus from inflation to the jobs market in determining Fed policy, and it’s a knife edge:

• “relatively small differences in Friday’s jobs reading could materially affect Fed policy”
• broader labour market trends indicate a steady weakening
• hiring is slowing hiring, declining hours worked falling, rising unemployment

• “We know from past cycles that once this cycle begins it has always progressed to a US recession”

Info comes via piecing together various media reports on the Citi note

This article was written by Eamonn Sheridan at www.forexlive.com.