Non Farm Payrolls - January 5th 2007

It is not news that news moves financial markets. This blog will publish research on how, when, why, and which news moves what financial markets.

Yesterday I reported that there seems to be lots of uncertainty leading up to tomorrow’s non-farm payroll announcement. Well, the numbers are in and Nonfarm employment increased by 167,000 in December.

Derivatives-based expectations had been declining for the last few days with the auction just before the announcement giving a market forecast of 77,9000. The market surveys were anticipating 100,000-115,000 but with some risk on the downside -" optimistic given the recent weakness in other jobs data" and"but this might prove to be tooa lot of people were looking for a nasty number because the ADP jobs report said the economy LOST 40,000 jobs." This sentiment was captured in the distribution of expectations:

My research suggests that the news that will drive the market this morning will be the 89,100 surprise (167,000 minus 77,900).

The uncertainity indicator information from the derivatives auction was correct - this one surprised the markets.