Société Générale economist Brian Jones is usually above consensus when it comes to forecasting nonfarm payroll gains, but this month, he’s relatively bearish — he predicts only 150,000 workers were added to nonfarm payrolls in November, below the 185,000 consensus estimate.
Jones doesn’t stop at a prediction for how many payrolls were created in November, though. He also predicts exactly how markets will move immediately following the release.
“The SG forecast is below consensus and a marginal negative intraday impact for risky assets is expected if the SG forecast materialises,” says Jones. “We expect [the S&P 500] to move down 0.2% and the [10-year] USD swap rate down by 2 [basis points] in the first half-an-hour after the release.”
Jones says there is a statistical relationship between the deviation of the actual nonfarm payroll print from the consensus forecast and the market’s reaction.
“The relationship between asset changes around the release and the spread NFP versus consensus is measured by a regression (OLS),” says Jones.