Let’s suppose we have strong employment report. Will it change the state of play very much?
Nope.
The Fed will keep easing no matter what, until the unemployment rate is closer to 7% than 8%.
Politically the report will likely be more consequential. A poor report will give the Romney campaign a cudgel with which to beat the president. A good report may take some of the immediate pressure off of Obama after a disastrous debate performance last evening. But ultimately it would likely be too-little-too-late to change the narrative on jobs too much.
My guess is markets would like to see a moderately firm employment report which keeps the Fed firing on all cylinders while keeping a few flickers of hope alive for a late-year economic recovery. Ultimately that outcome would support risk appetites.
UPDATE: The NFIB small business lobby reports hiring among its members was crappy (that’s a technical term) in September.
