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Payrolls Friday. Contain your excitement

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Employment report Friday – one of the most watched, most revised, and most misunderstood set of figures on the planet is about to be released. We expect the general story of a (selectively) strong labour market to continue.
  • As Fed President Williams has recently emphasised, when the Fed says it is "data dependent" it does not mean it is obsessing about every single data release. Data is increasingly imprecise. Economic modelling is always imprecise.
  • What matters to policymakers and economists is the trend in data, not the noise of single data releases. If growth is rising, employment is rising and inflation pressures are rising, the direction of interest rates should not be affected by a single data point.
  • Away from the data there is always noise to distract. Asia has decided it is "risk on". Why? Why not? The rational markets hypothesis lies in shattered fragments at the feet of this year's market moves.