UBS Expects The Unemployment Rate To Drop To A Level That Could Spook The Markets
"After reviewing our estimate, we have revised up our forecast for November payrolls to 190k from 160k," Matus wrote clients. "We maintain our earlier estimate of an unemployment rate decline to 7.0% from 7.3%."This morning, we saw a huge boost in ADP's estimate of private payrolls (215,000), but Matus says that the report wasn't his firm's motivation to up its forecast. From the note:
7.0% would likely be seen as a major milestone for the unemployment rate. Perhaps it would even spook markets, since anything closer to the Fed's 6.5% target might jolt people into thinking the central bank is approaching the decision to raise interest rates.A strong print on Friday would certainly lead many to speculate that the Fed will taper its asset purchasing program this year rather than next.
Keep an eye on Friday's jobs report. It's going to be a big one.
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