The upcoming Non-Farm Payrolls () report is set to be released tomorrow, with a consensus expectation of 110K, compared to the previous release of 139K.
While this data is typically released on the first Friday of every month, this month’s report comes on Thursday, July 3rd, due to Independence Day (July 4th), when US markets will be closed.
For those newer to trading, the NFP is one of the most market-moving data releases globally, as it offers insight into the health of the US labor market for the month that just concluded—with the also published at the same time.
The reason this data matters so much is because of the American consumption cycle, which is historically very strong. However, slowing job creation tends to reduce US , which affects the performance of US stock indices, and consequently impacts demand for the , in which most global assets are priced.
This creates a domino effect: a stronger or weaker US workforce can shift expectations around Federal Reserve policy—including the likelihood of hikes or cuts—which then ripples across to other central banks and currency markets.
Seasonal Trends for the July NFP Release
Since the Great Financial Crisis (2008), Dollar demand has outperformed most major currencies, with US growth leading over other G7 economies, attracting significant global capital inflows. However, that dominance is beginning to fade, as Trump’s unpredictable policies and concerns over US fiscal and debt sustainability have made investors more cautious, encouraging greater international diversification.
Let’s now explore:
- Seasonal trends for July payrolls
- Recent NFP surprises and how they’ve moved markets
- What potential reactions traders might expect from this key report
Also excluding outstanding data points such as the 2010 -167K Census Layoffs and 2021 Later COVID Recovery (+850,000), the average for the July NFP is just above 200K.
3 Most Recent Major Surprises and Market Reactions on the USD and S&P 500
The most recent largest surprises (+100K) on the NFP Releases have all happened since 2021.
The most recent was in January 5, 2024: +106K surprise which led to US 10Y Yields rising by 10 bps, going from below to above 4% (yields were trending lower), with Yields trending higher after and Stock Indices stopped their correction leading to a 12% rise in the following 3 months.
Another major surprise, happening on June 7 2024 was negative: -55K relative to expectations which sent markets shaking with Hard Landing fears (that still did not materialize): Cuts started to price in leading to a 10% correction in Equity indices in July 2024 and Carry trades unwinding significantly.
In the same trend, 10Y Yields retracted severely going from 4.40% in the beginning of June 2024 to lows of 3.63% in September 2024.
The third most recent surprise was on October 26 2023, as markets were trying to price in the first FED Cuts and expecting progressively slowing US Job creation – +166K surprise that sent stocks blazing 1.2% on the session and created a major bottom for downtrending prices. 10Y Yields shot up 11bps that session before trending down as markets were repricing a Soft Landing from high inflation trends.
What to Expect From This Upcoming Report
Equity Indices have been in a frenzy, rebounding sensationally from early 2025 Trump-tariffs leading to global recession fears.
A 20% correction from previous all-time highs led to the ongoing +30% recovery in all major US Indices, with Indices bottoming in April shortly after the Liberation Day announcements.
What’s priced in:
Euphoric mood since the Israel-Iran conflict concluded led to new All-time highs in the Nasdaq and S&P, other global indices are also trading close or above their ATH. Markets which were scared of global activity slowing down due to tariff fears of imminent stagflation are scared-no-more, with the pricing of “TACO” Trades (Trump Always Chickens Out).
The idea is that despite menaces, deals are always found and the activity in the leading economy stays as strong. As a matter of fact, the Unemployment Rate hasn’t ticked down despite consumer sentiment shooting down and recovering since January.
What to expect (subject to largely different reactions as markets are tough to predict):
A miss would create the most dramatic scenario, where one may expect USD selling to resume with markets getting confirmation on their fears for the US Economy – Sell Equities, Sell the USD, Yields down significantly, Gold up. The extent of such moves would depend on how big the miss is.
A beat would pursue the ongoing trend – Higher equities, higher yields due to more pricing out of FED Cuts, USD up significantly, Gold down, Oil up.
In line (+/- 5K) data would generate some profit taking – USD recovers slightly, some profit taking on Equities, slower but continued price discovery for US Equity indices, potential for rangebound price action, Gold retraces back down, yields up small.
Safe Trades for the upcoming NFP!