SG Cross Asset Research
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.
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