We expect headline job gains fell to 80,000 in Nov’25 from 1,19,000 in Sep’25. Oct’ NFP we expect around -20,000. Federal government employment was likely a substantial drag though due to DOGE deferred resignations. The unemployment rate likely remained sideways at 4.4% in November. Average hourly earnings (AHE) growth likely remained subdued in October before ticking higher in November. The average workweek appears to have improved in November as well, adding further support to labor income growth. For now, the labor markets look stable. The year end seasonality might be a factor supporting labor markets as well. Initial jobless claims have been subdued, continuing claims are sideways & employment component in service sector surveys have improved in last 2 months. Measures of labor demand have also improved in recent months, including the Conference Board labor differential and JOLTS job openings. But ADP private employment is a negative outlier, with a steep drop in November (-32k), following a solid 47k pickup in October. The DOGE impact as per us is a 60k decline in October, followed by a 20k drag in November. In summary, Oct & Nov NFP data can be very noisy and markets might not get a straight conclusion post the data release. We looked at 2013 shutdown to see possible patterns. In November 2013, the month following the federal government shutdown, the unemployment rate fell by 30bps. However, this was the result of a massive 940k gain in household employment, of which 340k were government wage and salary workers. The November jump followed a similarly outsized 880k drop in October household employment, of which 507k were government wage and salary workers. On rate cut pricing, we don't expect much change post the NFP data release. We continue to expect two more rate cuts of 25 bps each in CY26, one in the 17th June FOMC meeting & the last cut in the 16th Sep FOMC meeting. We expect US economy to out perform other DMs and hence expect DXY to strengthen from current levels of 98.4 towards 102 in medium term. We expect long end UST yields to eventually move northwards to our target of 4.3%.This is as per our last trade reco on 9th Nov. https://macro-spectrum.com/trade-recommendation/sell-10yr-ust We also expect risk assets especially S&P500 to end the year around 7000. We had given the same trade recommendation on 8th Nov as below: https://macro-spectrum.com/trade-recommendation/buy-sp-500
