TD Securities’ Global Strategy Team highlights a bull-steepening in US rates as Oil fell and geopolitical headlines hit sentiment. For May Nonfarm Payrolls (NFP), they forecast a 60k headline gain, unemployment at 4.4% and Average Hourly Earnings (AHE) up 0.3% m/m, expecting a dovish market reaction that may be limited by ongoing focus on US inflation data.

NFP forecast points to slowdown

"On Friday, all focus will be on NFP, where we expect a headline of 60k and UE to increase to 4.4%. While we are likely to have a dovish reaction, the market's response will be capped given the focus on inflation."

"We expect headline payrolls to slow to 60k, with 60k private and 0k government (cons: 85k). The move lower in May will likely be led by a moderation in trade, transportation & utilities job gains, while healthcare will continue its outsized strength."

"We also look for the unemployment rate to increase to 4.4% in May (cons: 4.3%), with the risk that declining participation keeps it level."

"We expect AHE to increase 0.3% m/m (cons: 0.3%), translating to 3.5% y/y (cons: 3.4%)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)