If today’s NFP data was to reveal an acceleration in payrolls it would certainly push further back the expectations on the timing of a downturn, reinforce the ‘higher for longer’ mantra and fuel renewed UST bond selling and Dollar buying.

An in-line print may be greeted with some relief that extends the correction in yields a little further lower from here which would allow the Dollar to adjust a little further weaker too.

The Fed’s Summary of Economic Projections in September revealed expectations of the labour market being stronger (unemployment rate revised down from 4.1% to 3.8% for Q4 2023 – the current level) which means any disappointment in the data like another jump in the unemployment rate has the potential to influence rate expectations that bit more.