The ranges of estimates are important in terms
of market reaction because when the actual data deviates from the
expectations, it creates a surprise effect. Anotherimportant input in
market’s reaction is the distribution of forecasts.
In
fact, although we can have a range of estimates, most forecasts might
be clustered on the upper bound of the range, so even if the data comes
out inside the range of estimates but on the lower bound of the range,
it can still create a surprise effect.
Non-Farm Payrolls
0K-144K range of estimates60K-100K range most clustered75K consensus
Unemployment Rate
4.4% (1%)4.3% (59%) – consensus4.2% (39%) 4.1% (1%)
Average Hourly Earnings Y/Y
3.9% (7%) 3.8% (31%) 3.7% (59%) – consensus3.4% (3%)
Average Hourly Earnings M/M
0.4% (5%)0.3% (91%) – consensus0.2% (4%)
Average Weekly Hours
34.4 (3%)34.3 (83%) – consensus34.2 (14%)
Overall, expectations are dovish for this report and the positioning is diametrically opposite to the one we had in August.
This article was written by Giuseppe Dellamotta at investinglive.com.