US nonfarm payrolls data was released today. This is important data for markets trying to understand how and at what speed the FED will change its monetary expansion policy lately. In particular, it can give an idea of when the reduction in the FED’s bond purchase program will begin. In this respect, markets care about how fast the US economy is recovering.
When we look at the non-farm employment data, we can see that it is below the expectation of 500 thousand. We can see that the error is below the 235 thousand data received in the previous month (which was also considered weak). This may cause the FED to take it slow for a while, which is still confused about when the reduction in bond purchases will begin.
At the previous Fed meeting, it was announced that the bond purchase program would end in the middle of 2022. However, no exact time was given as to when it would start. Markets also saw this positively. With this data coming in now, the positive atmosphere for the markets will continue.
It is possible that the FED will show December for the reduction in bond purchases at its November meeting. For this reason, a short-term positive atmosphere may occur in the markets. However, it should be noted that although the incoming data is below expectations, it is not bad. The USA is a well-recovered country. Compared to previous employment increases, the incoming data is not bad. Unemployment rates also continue to decline.
The rate hikes that the market fears for 2022 will be determined by the course of inflation. For this reason, the surprise data that will come there will activate the FED. FED Chairman Powell said, “If inflation is seen to be permanent, the FED will use its resources for this.” had made the statement. Therefore, markets will follow inflation closely.
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