Non-Farm Payrolls Shape Week Ahead
U.S. non-farm payrolls take center stage this week, followed by Chinese manufacturing data and Brazil’s monetary policy meeting.
NFP could bolster Fed commentary. August non-farm payroll data, released this Friday, will either support or undermine Chair Yellen’s hawkish communication last week. Although August non-farm payrolls will likely drop from July, they could support a rate hike if the data fall within market expectations. Ahead of Friday’s NFP print, speeches by two FOMC members and U.S. manufacturing data will influence market expectations for rate normalization.
China’s ongoing concern. Flash Caixin manufacturing data for August suggest that Chinese manufacturing growth is slowing to its lowest rate since 2009. Although risks associated with China have receded over the past several months, this Wednesday’s complete release may support the argument that China’s slowdown is not fully contained.
Limited choices for Brazil. The Central Bank of Brazil (Copom) is struggling to address persistently high inflation during its longest recession on record. Although Copom needs to cut rates to support growth, it is imprudent for the Bank to lower its 14.25% benchmark rate at the risk of spurring inflation. However, amidst renewed fiscal responsibility, the Bank may introduce the possibility rate cuts at its Wednesday meeting.
http://rsquaredmacro.com/non-farm-payrolls-shape-week-ahead/