MBS Day Ahead: Look At This Chart Before Assuming You Know What Matters

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Posted To: MBS Commentary

Beliefs, expectations, and assertions can be tricky business if they're not backed up by hard data. No other economic report brings as many armchair economists off the bench to make predictions as nonfarm payrolls. Recently (in the past 2 years or so), there's been a visible shift toward the belief that the wage growth component is just as important–if not more so–than the headline. How relevant is that belief? Take a look at the following chart and decide for yourself. In the chart, each of the past 7 NFP releases is labeled with the payroll count and the wage data result vs expectations. If the caption says "wages flat," that could be a 0.0 vs 0.0 result, or a 0.5 vs 0.5 result. If it says "wages miss by 0.2" that would mean the result was something like 0.1…(read more)

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