(News Bulletin 247) – Whether it is retail sales, GDP or even the American employment report, investors digest an often large batch of macroeconomic publications every week. But which one has the most influence and why?

Almost every week, market news is punctuated by a more or less significant number of major statistical publications. PMI, business climate, producer price indices, consumer price indices, PCE index, employment report, retail sales, household confidence… The list is obviously very long.

But not all of these publications are necessarily equal. Which has the most influence on the markets?

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A crown regained

Let’s put an end to the suspense right away: the American employment report dominates. Remember that this publication contains a number of monthly indicators such as job creations generated by the American economy, the unemployment rate and even salary progression.

This was not always the case, however. “We went through a period where the consumer price index (CPI, the best-known measure of inflation, Editor’s note) was more important than the employment report (NFP). It is true that we had somewhat forgotten the CPI before inflation jumped in 2022”, underlines Vincent Juvyns, “global market strategist” at JPMorgan.

With the sharp rise in inflation, the consumer price index has, in 2022 and 2023, taken center stage, with the priority for the major central banks then being to curb the rise in prices. The CPI has also had more importance on the market than the PCE index, an alternative measure of inflation favored by the American Federal Reserve (Fed). To the great dismay of Capital Economics which judged that the market was making a mistake.

But Bank of America noted in September that the US employment report has now moved back ahead of the CPI. “Job creations have regained their crown as the most important publication of data for the equity markets,” the American bank then underlined.

The establishment was based on the evolution of futures contracts on the S&P 500, over a period going from 5 minutes before publication to 30 minutes after. It appears that these futures contracts have shown more volatility with inflation figures from the end of 2022 to the end of 2023. But since 2024, they have been “less sensitive to the consumer price index than to the any other time in the post-Covid period, with the employment report now the main source of volatility,” concluded Bank of America.

Volatility of figures and short-term publications

This was particularly notable last August when the poor figures from the US employment report caused a mini-crisis (quite short-lived in reality) in the market, with investors fearing a pronounced slowdown in the US economy.

In a way, it’s a return to normal. “Historically, the NFP is the most followed publication on the market for a simple reason: it helps capture American consumer sentiment and constitutes in some way a leading indicator of consumption which represents 70% of American GDP. the canary in the coal mine, and the United States remains the country where statistics matter the most for the market, because it is the world’s largest economy, with repercussions for the entire world. , develops Vincent Juvyns.

Especially since the American Federal Reserve (Fed) is now less focused on inflation. “The employment report has greater importance at the moment because the Fed is currently more sensitive to the labor market than to inflation in its dual mandate,” explains Vincent Juvyns.

“The reality is that we have moved away from inflationary risk,” adds Christopher Dembik, investment advisor at Pictet bank.

So why can the market be so sensitive and volatile after the US jobs report? Christopher Dembik puts forward several reasons.

First of all, the data on American employment vary more widely from one month to the next than those on inflation, with sometimes significant deviations from expectations. “On inflation figures, there are rarely big market movements, including when the market is particularly interested in these data because the final figure generally has a fairly small deviation from the consensus and varies relatively little from ‘month to month,’ he explains.

Conversely, the figures in the employment report are much more volatile. “We focus on the NFP, but it remains an imperfect measure of employment with significant upward and downward revisions, months or even years later. This is why we should not overinterpret and instead look at an average over three months or even six months to smooth and eliminate exceptional factors,” warns the market expert.

Market volatility can also be due to trader bets. “There may be tactical movements of investment funds or hedge funds which take a position and depending on the result (of the employment report, Editor’s note) you thus have volatility and a significant reaction intraday (on the same session, Editor’s note)”, explains Christopher Dembik.

As for other countries, Chinese data are appreciated more in waves, unlike the American employment report, and “especially influence the session in Asia”, while market reactions following European indicators are ” infinitesimal and (these indicators) can sometimes go unnoticed,” he adds.

Nvidia, the “Super Bowl” of the markets

There remains a new indicator that seems to be gaining importance to the point of rivaling data on inflation or American employment: Nvidia’s quarterly results. The graphics processor group has seen its price soar at the same time as demand for its products, which have become critical for developing generative artificial intelligence. To the point that his publications now seem to have a systemic nature for the market.

“The publication of Nvidia’s results has become a spectacle in the same way as the employment report in the United States, attracting AI enthusiasts to evenings like the Super Bowl,” said Stephen Innes of Spi AM in August.

Is this really the case? “Nvidia’s results rival American employment without dethroning it,” estimates Christopher Dembik. “We can consider that Nvidia has an impact on the entire equity markets and even on bonds with an impact perhaps more lasting than a report on employment,” he adds.

“It is difficult to say whether Nvidia is more important than major economic indicators. Nvidia’s publications are important in the sense that they help anticipate demand for the entire artificial intelligence value chain “, judge for his part Vincent Juvyns. “However, when there is a disappointment on an indicator, it can always give the Federal Reserve more room to lower rates. Whereas a disappointment on AI and fears on tech are not accompanied by this type of support,” he adds.