USD: Payrolls and retail data steer curve – TD Securities

TD Securities analysts expect February US Nonfarm Payrolls to slow to 60k, with the Unemployment Rate steady at 4.3%. They also look for a 0.2% monthly rebound in January Retail Sales. They anticipate modest bear flattening in US yields as markets stay focused on geopolitics and incoming data.

Payrolls slowdown and sales rebound eyed

"On Friday, focus will be on payrolls where we expect a print of 60k and the UE to remain unchanged. This is likely to cause a modest bear flattening of the curve, while markets remain largely focused on geopolitics. At the same time as payrolls, retail sales from January will be also be released."

"We expect headline payrolls to show a moderation in job gains to 60k with 70k private gains and 10k government job losses (consensus: 55k). A large portion of the moderation in private payrolls will likely come from a mean-reversion in healthcare along with negative strike effects. We also look for the UE rate to go sideways at 4.3%—a sign of continued labor market stabilization (cons: 4.3%). However, we see the chance of an increase to 4.4% as higher than a decline to 4.2%. AHE likely moderated to 0.2% m/m and 3.7% y/y."

"We revised down our initial 90k forecast following the BLS revision to the strike report—which now confirms the impact of the strike at Kaiser Permanente as 31k, much larger than initially reported."

"We expect retail sales to rebound in January, rising 0.2% m/m after a flat reading to end 2025 (consensus: -0.3%). Strength in auto sales will likely outweigh weak gasoline spending in the month. The control group—which is used for official spending estimates—likely improved to 0.2% m/m, but in real terms likely remained stagnant (consensus: 0.3%)."

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