All Eyes On This Morning's Employment Report _work_labor_business_employ_1010_565x377.jpg) Image: Bigstock Stocks closed lower yesterday ahead of this morning's Employment Situation report. Wednesday's FOMC announcement on rates, aside from the widely anticipated 75 basis point rate hike, had something for both the hawks and the doves. On the one hand, rates are likely to slow at the next meeting (December) or the following meeting (February). At present, there's over a 55% chance they 'only' raise 50 bps in December. On the other hand, they suggested the terminal rate (the level at which they hold rates steady for a while), could climb above their previously forecasted 4.6% in 2023 (maybe rise to 5%?). Personally, I don't see any of that as being overly negative. In fact, they are acknowledging they will soon slow their pace, and will then pick a stopping point. That's likely a little higher than what they previously forecasted. But it doesn't sound like a much of a departure. And the market (give or take 25-50 basis points), was probably figuring that into their outlooks anyway. The market now shifts its focus to the employment report. The consensus is calling for 210,000 new jobs (200K in the private sector and 10K in the public), with the unemployment rate ticking up from 3.5% to 3.6%. The hotter than expected jobs reports recently have been both cheered and feared. Cheered as it stands in stark contrast to recession fears and underscores the strength of the economy. But feared as well because it shows (at least to the Fed) that their interest rate hikes have not slowed the economy down by much. At least not enough to make a noticeable dent in aggregate hiring, which some are looking at as a proxy for inflation. So this morning's report will be watched for two things: 1) what will the number be? And 2) whether big or small, will that be interpreted bullishly or bearishly? We shall see. In other news, yesterday's Weekly Jobless Claims came in better than expected, falling by -1,000 to 217K vs. views for 222K. The PMI Composite report came in at 48.2 vs. estimates for 47.3. And the Services Index came in at 47.8 vs. estimates for 46.6. The ISM Services Index, however, just missed the consensus of 55.4 to come in at 54.4. And Factory Orders were up 0.3% m/m, in line with expectations. But the report everybody's been waiting for is this morning's Employment Situation report. And that comes out at 8:30 AM ET. Should be a busy day. Best,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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