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. Another
important 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-176K range of estimates75K-130K range most clustered110K consensus
Unemployment Rate
4.3% (1%)4.2% (83%) – consensus4.1% (15%) 4.0% (1%)
Average Hourly Earnings Y/Y
3.9% (3%) 3.8% (69%) – consensus3.7% (25%)3.4% (3%)
Average Hourly Earnings M/M
0.4% (2%)0.3% (75%) – consensus0.2% (23%)
Average Weekly Hours
34.3 (38%) 34.2 (62%) – consensus
Fed Chair Powell mentioned that they focus on the unemployment rate, so that’s going to be the most important metric to watch. I feel like the market is already positioned for a good report so a weak one is likely to trigger bigger moves.
This article was written by Giuseppe Dellamotta at investinglive.com.