The US Department of Labor today will announce the December NFP employment report. The NFP data in November was upset again, and a new variant of the virus Omicron followed in December. However, the good news is that the impact of the epidemic should not be reflected in this data. On the whole, the market is still quite compliant with the NFP expectations, especially when ADP employment is significantly better than expected. However, after the NFP upset several times last year, it is necessary for the market to look at the recovery of the labor market more cautiously.

From the Fed's point of view, the labor market is not the focus of its most attention, but has been replaced by soaring inflation. In order to curb inflation, the Fed will inevitably move towards raising interest rates or even shrinking its balance sheet this year. Of course, a healthy recovery in the labor market would be more perfect for the Fed, and it can also curb inflation more effectively, but it is often impossible to have both. .

The forecasts of 24 large investment banks show that the major investment banks have a large gap in the expected increase in the NFP employment population in December, but the unemployment rate and the average hourly wage rate are expected to be closer. Specifically, after the US December seasonal adjustment, the NFP employment population growth rate is expected to be between 260,000 and 600,000, the unemployment rate is expected to be between 4.0% and 4.3%, and the average hourly wage growth rate is expected to be between 4.0% and 4.2%.

It is worth noting that, compared with the increase of 210,000 in November, most investment banks believe that NFP increase in December will stimulate the Fed to raise interest rates in advance and reduce bond purchases, which will benefit the US dollar index.