Global financial markets are closely watching the release of delayed US non-farm payrolls data for October and November. The reports, postponed due to the government shutdown, arrive at a crucial time as investors assess the Federal Reserve’s (the Fed) next move on interest rates. Economists suggest that slowing job creation could accelerate expectations of the Fed nearing the end of its tightening cycle, creating a divergence with Australia’s monetary policy. National Australia Bank (NAB) said the US labour market update will be “instrumental for the Fed and markets.”
While the US jobless rate is expected to remain steady at 4.4 per cent in November, hiring forecasts indicate weakness, with consensus pointing to just 50,000 new jobs. NAB anticipates that “evidence of further softness in job creation will lead to some repricing of a January 28 US rate cut.” Markets currently assign only a 20 per cent probability to a January cut. Westpac cautions that the dual release is likely to be volatile with a “high likelihood of abnormal noise” in the data.
Following the jobs data, the US will release November inflation figures, with headline CPI expected at 3.1 per cent. Investors will be closely monitoring any pick-up in goods inflation related to tariffs. These economic indicators contrast with the situation in Australia, where Reserve Bank of Australia (RBA) Governor Michele Bullock recently dampened hopes of a near-term rate cut. Westpac’s upcoming consumer sentiment update will provide an early indication of consumer confidence amid higher interest rate expectations. Westpac is a financial institution that provides a range of banking and financial services. The Reserve Bank of Australia is the central bank of Australia.
In other global central bank news, NAB economists expect the Bank of England to cut rates by 25 basis points to 3.75 per cent. The European Central Bank is expected to hold rates steady at 2 per cent, while the Bank of Japan is expected to lift rates to 0.75 per cent. The S&P/ASX 200 index is set to drop to trade around 8659 on Monday. In the US, the S&P 500 fell more than 1 per cent on Friday.
