Will a strong non-farms report mean a Fed rate hike?

While a repeat of October’s estimate-smashing number is unlikely tomorrow, a non-farms report broadly in line with the 200,000 consensus could be key in solidifying a Federal Reserve rate hike later in December.
 

Jobs
Source: Bloomberg

With US payrolls averaging 217,000 jobs a month this year, the trend has been for strong jobs growth. Many feel that this jobs report will solidify a December hike from the Federal Reserve, with the unemployment rate sitting nicely at their year-end forecast.

Economists’ consensus is that we will see 200,000 jobs created, but what happens if we see an unexpectedly lower number of under 140,000? Would a poor number significantly lower the implied probability of a hike at the December Federal Open Market Committee meeting? One feels that with the Fed’s credibility at stake, a failure to hike in December could be taken very negatively by traders both for US equities and the USD.

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