Neutral Market Reaction to an In-Line Nonfarm Payrolls Report

By Minyanville Staff  JAN 04, 2013 5:30 PM

Today's financial recap and tomorrow's financial outlook.


The Bureau of Labor Statistics reported nonfarm payrolls data from the month of December and it was relatively in-line with what economists were expecting. The report showed a gain of 155,000 nonfarm payrolls and 168,000 private payrolls, though these were slightly less than the prior month as those figures were revised higher. For the month of November, nonfarm payrolls were revised up to 161,000 from 146,000 and private payrolls to 171,000 from 147,000. The unemployment rate was unchanged at 7.8%, though the prior month was revised up to 7.8% from 7.7%.

Since Thursday's ADP report was much better than expected, the market reaction was neutral with the S&P 500 drifting higher all day. The US dollar opened the day much higher, but sold off after the news, giving gold and energy a kick to the upside. Gold, which reached an intraday low of 1627, recovered to close at 1658. The weekly natural gas inventories report from the EIA showed a draw of 136 billion cubic feet (BCF), positive for natural gas as the expectations were for a draw of 130 BCF. Natural gas finished the day up to $3.282/BTU.

The other economic data out of the US was the ISM's non-manufacturing index and US factory orders. The ISM's non-manufacturing index jumped to 56.1 from last month's 54.7, ahead of economist expectations of 54.7. The biggest jump was in the employment sub-index, which jumped to 56.3 from 50.3. Factory orders declined to 0.0% from last month's 0.8%, worse than the 0.4% consensus estimate.

After the economic data was out, the rest of the day was mostly quiet. Bonds made a late-day charge after heavy selling over the past two days, but across the curve were only able to get back to flat in most cases.

Tomorrow's Financial Outlook

The docket for Monday is quiet with no US economic data and the eurozone's producer price index. On Sunday, the central bank committee for the Bank of International Settlements will meet in Switzerland to discuss how to strike a compromise for the capital and liquidity ratios for banks that will be necessary under the Basel III rules.

For all the football fans, NFL wildcard games will start on Saturday.

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