Good morning ❤️,
#USNonFarmPayrollReport
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MODEL OBJECTIVE
Convert the US Non-Farm Payrolls (NFP) release into:
• policy probability
• liquidity direction
• cross-asset risk bias
NFP is not a growth signal.
It is a policy constraint variable.
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🧠 1️⃣ INPUT VARIABLES (WHAT REALLY MATTERS)
Analysts prioritize quality over headlines:
• Payroll growth – momentum, not magnitude
• Wage growth (MoM & YoY) – inflation persistence
• Unemployment rate – trend, not print
• Participation rate – hidden slack
• Revisions – truth often lives here
👉 Wages + participation outweigh headline job adds.
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⚖️ 2️⃣ FED REACTION FUNCTION
How policymakers interpret the data:
• Strong jobs + hot wages
→ restrictive bias stays
→ rate cuts delayed
• Strong jobs + cooling wages
→ neutral stance
→ “wait-and-see” regime
• Weak jobs + cooling wages
→ easing probability rises
→ policy pivot risk increases
• Weak jobs + sticky wages
→ policy dilemma
→ volatility spike
NFP only matters through this reaction lens.
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💵 3️⃣ LIQUIDITY TRANSMISSION
Translate policy expectations into market impact:
• Delayed cuts → tight financial conditions
• Rising real yields → risk asset compression
• Clear easing path → liquidity expansion
• Policy ambiguity → range-bound markets
Liquidity leads price. Always.
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📉 4️⃣ CROSS-ASSET RESPONSE MAP
• Bonds: React first, signal credibility
• USD: Strengthens under restrictive bias
• Equities: Sensitive to wage-driven rate outlook
• Crypto: Trades liquidity expectations, not jobs
• Gold: Benefits when policy credibility weakens
If bonds don’t confirm, the move is suspect.
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⚠️ 5️⃣ VOLATILITY & FALSE-SIGNAL FILTER
High-risk environments:
• Headline beat + wage surprise
• Positive print + negative revisions
• Risk assets rally while yields rise
These are liquidity traps, not trend starts.
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📊 MODEL OUTPUT
Bullish Risk Regime
✔ Cooling wages
✔ Stable employment
✔ Falling real yields
✔ Rising easing probability
Neutral / Chop Regime
➖ Mixed labor signals
➖ Fed ambiguity
➖ Stable yields
Bearish Risk Regime
✖ Hot wages
✖ Delayed policy easing
✖ Rising real yields
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🧠 ANALYST CONCLUSION
#USNonFarmPayrollReport is not a trade by itself.
It is a macro input that shapes:
• policy probabilities
• liquidity expectations
• risk-on vs risk-off regimes
Analysts don’t trade the number.
They trade how the number changes the liquidity path.
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