The Federal Reserve can’t ignore the improving employment picture forever. Friday’s non-farm payrolls report showed the best jobs picture in six year and yet Yellen & Co continue to preach patience and rock-bottom interest rates.
The JOLTS (Job Openings and Labor Turnover Survey) is due at 10 am ET (1400 GMT) on Tuesday and could help shift the debate at the Fed. The Federal Reserve isn’t ready to hike rates yet but it’s getting close and that means every employment indicator is in focus.
The JOLTS report was a favorite of Ben Bernanke but it gets a tepid response it the market because it’s released long after the end of the month. Tuesday’s report is for August while the Sept non-farm payrolls report has already been released.
For the Fed, it’s a chance to confirm the underlying trend. But really, what’s left to confirm?
The JOLTS report is expected to rise to 4700K on Tuesday
The Fed really doesn’t need any more evidence on the economy to start raising rates. Core members are increasingly pointing to inflation and secondary job indicators but there’s a lag in monetary policy and it would be responsible to move to 1.00% just to keep a lid on some of the excesses building in the credit market.
But for now, the JOLTS report will need to be at 4750K to get officials to take notice.
In the FX market, Friday’s non-farm payrolls report sent the dollar to cycle highs on most crosses but on Monday the dollar faded back as longs took profits. The overwhelming trend has been to buy dips (even shallow ones) and the US dollar will rally again on any signs of strength in the JOLTS report.
Will Yellen finally fire the starting pistol for rate hikes?
