We look for NFP to mean-revert to 190k in February – TD Securities

Previewing next week’s significant macro events next week in Americas, “Following two consecutive reports with initial 300k+ prints, we look for payrolls to mean-revert to 190k in February,” TD Securities analysts said.

Key quotes

“We also expect the phase-out of the impact from the government shutdown to be reflected on a tick down in the unemployment rate to 3.9%. Lastly, we forecast wages to rise by a “soft” 0.3% m/m pace (3.3% y/y) in February aided by a favorable reference week.”

“Disappointing Q4 GDP complicates what had originally looked like a placeholder BoC meeting. This may challenge Pololz’s conviction on future rate hikes and while we expect the Bank to leave forward guidance unchanged for now, the poor GDP introduces a material risk that they will abandon the pretense of further tightening given their adherence to data-dependent monetary policy.”

“NY Fed President Williams speaks on “The Economic Outlook: The ‘New Normal’ Is Now.” He may repeat no further rate hikes until inflation rises, which should get a dovish market reaction. If Williams again advocates “average inflation targeting” as part of the Fed’s framework review, markets would react even more dovishly.”