Citigroup warns that the upcoming NFP report may provide further mixed signals.

The US non-farm payrolls report, to be released next Tuesday, will update data for both October and November, providing a more complete picture of the labor market after a period of data scarcity.

Following a contentious meeting this week, the Fed lowered interest rates to a three-year low, with disagreements from some officials reflecting a debate over prioritizing inflation control versus supporting the labor market.

Reporting schedule and scope

Next Tuesday, the US will release the NFP data, including October and November figures, which will give policymakers and investors a more complete picture.

This double update ends months of uncertainty due to a lack of data, allowing for a more accurate assessment of employment trends, wages, and price pressures amidst changing policy.

The results will shape expectations for the interest rate trajectory following the Fed's recent rate cut. The full data will also help adjust growth models and the pricing of risky assets, especially interest rate-sensitive markets like stocks and cryptocurrencies.

Forecast and impact

Citigroup forecasts -45,000 jobs in October, +80,000 in November; unemployment rising from 4.4% to 4.52%. Reuters survey: 4.4%. Fed's quarterly forecast: around 4.5% by the end of the year.

Citigroup warned that the November increase may be primarily due to seasonal adjustments and does not reflect a genuine improvement in labor demand. This increases the likelihood of conflicting data signals, making policy guidance difficult.

Following the decision to lower interest rates to a three-year low, coupled with internal disagreements, a disruptive report could prolong the debate between inflation targets and employment. The impact could spill over into yields, the USD, stocks, and cryptocurrencies, with increased volatility around the time of the release.