US NFP data outlook for August looks uncertain

The US nonfarm jobs data for August is expected on Friday, with bond market investors seeking a reprieve from higher long-term rates. The August employment report showed the economy added fewer jobs than expected, but solid wage gains and a declining unemployment rate to 3.5% pointed to continued tightness in labor market conditions.

On Tuesday, US JOLTS job openings came out for July, keeping the’soft’ landing narrative alive. On Wednesday, US ADP private payrolls for August should be a respectable +188K, after showing an over-strong +324K print in July. US nonfarm payrolls should be a respectable +170K in August, after printing +187K in July.

If this is below +200K, the FOMC will likely cheer up a touch. The focus of this week’s data shifts to the economy’s weakening, with consumer data showing personal income growth is not keeping up with spending, while confidence remains steady. The Fed’s favorite inflation reading indicates subdued growth on a monthly basis.

The weekend will focus on US-China relations, with Commerce Secretary Gina Raimondo meeting with Chinese officials to lower tensions. Fed speakers will include Barr on banking services, Bostic and Collins on Thursday, and Bostic and Mester on inflation on Friday.

The US dollar is expected to remain strong in global financial markets, with analysts arguing that any significant downward pressure on the dollar would necessitate a highly specific set of conditions, which seem increasingly unlikely.