According to a report by Financial Associated Press on December 6 (Editor: Xiao Xiang), the USA Labor Department will release the non-farm employment data for November at 21:30 Beijing time tonight. For global investors, the importance of this last non-farm report of the year is evidently self-evident: it may determine whether the Federal Reserve can cut interest rates for the third consecutive time this month while also likely having a profound impact on the next direction of stocks, bonds, and the foreign exchange market.

Due to the impact of two hurricanes and frequent strikes, the non-farm employment data for October in the USA was somewhat "distorted"—the number of newly added non-farm jobs surprisingly recorded only 0.012 million. However, the negative effects on the labor market in late autumn have mostly dissipated by November. Tonight's non-farm employment report is expected to provide a clearer picture of the direction of the USA labor market. In fact, due to the return of labor after the hurricanes and strikes, the non-farm data for November may appear even more "brilliant" than normal.

So, what are the latest expectations in the market for the non-farm data?

According to the median of Bloomberg's survey, economists from the interviewed institutions currently expect the non-farm payroll to increase by 0.22 million in November (Note: as the sample size increases and predictions by investment banks are revised last minute, this forecast has climbed by about 0.02 million over the past few days, previously about 0.2 million).

From the distribution, analysts' estimates for the non-farm data in November range from 0.15 million to 0.284 million.

Notably, predictions from several well-known Wall Street banks—such as goldman sachs (0.235 million), bank of america (0.24 million), and jpmorgan (0.275 million)—are all significantly higher than the general market expectation. Whether these banks can prove their predictive authority within the industry remains to be seen, and investors may want to pay attention.

Regarding the unemployment rate in November, the median prediction from the Bloomberg survey is currently 4.1%, which is the same as the previous month. However, some media institutions have given a median estimate of 4.2%. The reason for some differences in this regard is easy to imagine: if broken down to two decimal places, the unemployment rate in the USA for October actually rose from 4.05% to 4.14%.

The difference in estimates of 4.2% and 4.1% may primarily be due to rounding. Because if the usa's unemployment rate really rises from 4.1% to 4.2% tonight, then the situation with two decimal places may also be worth investors' close examination.

In terms of wage growth, economists currently generally expect the average hourly wage in November to increase by 0.3% month-on-month and 3.9% year-on-year, which means both increases will be slightly lower than last month. If this meets expectations, it will be good news for the usa federal reserve's process of curbing inflation.

Kathy Jones, chief fixed income strategist at Schwab's Center for Financial Research, said: "I expect the non-farm payroll in November will be quite a healthy number, as it should reflect a bounce back from the extremely weak data in October, when we faced a hurricane and the boeing strike led to job losses."

Deutsche bank and citigroup predict that the return of the army of workers unable to work in October will bring an increase of about 80,000 new jobs. The impact estimated by bank of america economists is 0.1 million people — this is also the reason why the bank is ultimately optimistic that November's non-farm payroll is expected to grow significantly by 0.24 million.

Jeffrey Roach, chief economist at lpl financial, is relatively cautious and believes that non-farm payroll in November will increase by about 0.175 million. Roach said that there won't be many unexpected surprises in job growth in many areas, as we see that many employees at this level are not very willing to leave. However, he believes that there is one area that may experience unexpectedly high growth — transportation and warehousing, which will benefit from some ongoing work as well as increased storage demand from the consumer side or business side.

In some usa labor market indicators released earlier this week, job vacancies in the usa rose to 7.744 million in October, indicating that even amid a widespread hiring slowdown, workers are still seeking high-paying positions. However, Wednesday's "little non-farm" ADP data and Thursday's initial claims data both fell short of expectations, with the private sector creating about 0.146 million jobs last month, while initial jobless claims rose to 0.224 million.

The "big test" for financial markets and the usa federal reserve.

Before the usa federal reserve's monetary policy meeting in December, the only two remaining key indicators in the usa macroeconomic field are actually tonight's non-farm payroll and next Wednesday's CPI.

Regarding whether the Federal Reserve will cut interest rates in December, the Federal Reserve official who has expressed the most clear stance recently is undoubtedly Federal Reserve Governor Waller. He currently tends to support lowering the policy rate at the December meeting. Of course, he has set a prerequisite—"This decision will depend on whether the data we receive before that changes unexpectedly and alters my inflation outlook." Although Waller has not specified what the so-called data refers to, the importance of non-farm payrolls and CPI is obviously the most prominent.

According to the CME Group's Federal Reserve tool, interest rate market traders currently estimate that the probability of the Federal Reserve cutting rates in December is about 70%, while the probability of keeping rates unchanged is 30%.

It is not difficult to foresee that, although the probability of a rate cut in December is still far higher than that of no rate cut, the probability distribution of 70-30 is still not set in stone. In fact, if tonight's non-farm payrolls are significantly better than expected, it could completely reverse market predictions and greatly disrupt market trends.

So, what kind of forward-looking predictions have industry investment banks made about the market trends on this non-farm night?

Goldman Sachs has once again made five scenario estimates before the non-farm data as usual this week:

Non-farm > 0.3 million

Morgan Stanley estimates that the probability of this scenario occurring is 5%. Such tail risk would indicate that the US labor market has recovered from the weakness at the end of the third quarter and shows signs of a hiring acceleration. The downside risk to stocks would come from the bond market’s re-pricing of yields, which would lower or eliminate expectations for a rate cut in December. As a result, this could trigger the "good data is bad news" effect—at least for one day. In this context, the s&p 500 index is expected to decline by 0.5%-1%.

Non-farm payrolls between 0.23 million and -0.3 million.

JPMorgan estimates that the probability of this scenario occurring is 30%. Michael Feroli, chief USA economist at JPMorgan, predicts that non-farm figures will fall within this range, but the unemployment rate may rise at the same time. This situation will ease concerns about runaway inflation and keep the possibility of a rate cut in December. Of course, market reactions in the bond market may still be mixed, which means volatility in bonds will increase as investor consensus on a rate cut in December diverges. Against this backdrop, the S&P 500 index is expected to rise by 0.25%-1%.

Non-farm figures are between 0.2 million and -0.23 million.

JPMorgan estimates that the probability of this scenario occurring is 35%. This baseline scenario would indicate a recovery of November data from the weakness caused by hurricanes/strikes, and the data performance should enable the Federal Reserve to continue reducing rates in December, which could further reflect in the downward trend of bond yields, thus benefiting the stock market. Against this backdrop, the S&P 500 index is expected to rise by 0.5%-0.75%.

Non-farm figures are between 0.13 million and -0.2 million.

JPMorgan estimates that the probability of this scenario occurring is 25%. This would be a disappointing outcome for stock market bulls, as despite a strong start to holiday consumer spending, the labor market remains weak, which may also negatively affect subsequent consumer spending. Against this backdrop, the S&P 500 index is expected to fall by 0.5%-1%.

Non-farm figures are less than 0.13 million.

JPMorgan estimates that the probability of this scenario occurring is 5%. This would represent another tail risk. If the number of new non-farm jobs reported is less than 0.085 million, it could raise concerns over economic growth, especially if the new jobs are viewed as service-related and/or temporary. While USA Treasury yields would likely decrease—10-year bond yields could approach 4.0%—an unfavorable steepening of the curve for the stock market could still occur. Against this backdrop, the S&P 500 index is expected to fall by 0.75%-1.25%.

Coincidentally, John Flood, head of Americas equity sales trading at Goldman Sachs Global Banking and Markets, released a forward-looking report similar to JPMorgan's earlier this week.

Flood believes that the sweet spot for the usa stock market regarding this week's non-farm payrolls may be between 0.15 million and -0.2 million. The market is prepared for a significant rebound in non-farm payroll data from the dismal performance in October, as the adverse factors from previous hurricanes and strikes have passed. However, on the other hand, the stock market does not want to see new non-farm employment numbers exceeding 0.275 million, as unexpectedly hot data would provide Powell and the federal reserve team with the flexibility to keep a wait-and-see approach at the December meeting.

The following are six scenarios that goldman sachs believes could occur on non-farm night:

If the non-farm payroll number is above 0.275 million, the s&p 500 index is expected to drop at least 1%;

If the non-farm payroll number is between 0.235 million and -0.275 million, the s&p 500 index is expected to drop by 0.5%-1%;

If the non-farm payroll number is between 0.2 million and -0.235 million, the s&p 500 index is expected to either rise or fall by 0.5%;

If the non-farm payroll number is between 0.15 million and -0.2 million, the s&p 500 index is expected to rise by 0.5%-1%;

If the non-farm payroll number is between 0.1 million and -0.15 million, the s&p 500 index is expected to rise by 0%-1%;

If the non-farm payroll number is below 0.1 million, the s&p 500 index is expected to drop by 0%-0.5%.

In terms of other assets, the impact of non-farm data on the foreign exchange market, bond market, and precious metals market may be easier to determine than on the stock market. Typically, if the non-farm data is better than expected, it will be bullish for the dollar and US bond yields, and vice versa. Meanwhile, assets like gold are expected to generally move inversely to the dollar. Below is a summary of the fluctuations in gold in the half hour, one hour, and two hours after the release of different non-farm data deviations.