S&P500: U.S. Jobs Data Impact on Expected Fed Rate Hike

2023年3月21日

On the daily chart of the S&P 500, the Federal Funds futures indicate a probability of nearly 60% for a 50 basis point rate hike. Today's release of U.S. employment data may either reinforce the possibility of a 50 bps rate hike or tilt the balance towards a smaller increase of 25 bps. Experts predict that the U.S. economy will see the addition of around 200,000 new nonfarm jobs in February, with a projected increase in wages from 4.4% to 4.7%, and a steady unemployment rate of 3.4%.

Ideally, weaker U.S. jobs data would be preferable. Otherwise, the Federal Reserve may have to take action by implementing a 50 bps rate hike this month, which could speed up the decline in stock prices. If today's U.S. jobs data is below expectations, it may push back the anticipated Fed rate hike to 25 bps. On the other hand, if the employment data is strong, it will likely solidify the idea of a 50bp Fed rate hike later this month, resulting in higher yields and U.S. dollars but lower stocks.