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An impressive set of US jobs data - BAML

FXStreet (Barcelona) - Priya Misra, Rates Strategist at BAML explained the US September jobs report came in generally better than expectations…

Key Quotes:

"…with a stronger pace of job growth and pick up in weekly hours and an upward revision to the August number. The unemployment rate (UR) dropped to 5.9%, which was the lowest level since July 2008."

"It is also at the central tendency of the Fed's forecast for the year-end as of the September Statement of Economic Projections. Not only did the headline (U3) unemployment rate decline but so did the all-inclusive U6 rate, from 12.0% in August to 11.8%. The U6 rate is down from 13.6% in September 2013 and is the lowest since August 2008."

"So should this report propel the Fed towards a faster start to the hiking cycle? Not so fast. In previous speeches, Chair Janet Yellen has emphasized that the UR seems to overstate the improvement in the labor market."

"Hence, it is better to look at the broader labor market measures such as those captured by the Fed's Labor Market Condition Index (LMCI) which comprise 19 indicators. So what does the LMCI tell us about the improvement in the labor market and how do we compare with history?"

"For that we estimate the unemployment rate that would be consistent with the current level of the LMCI. We call this the "shadow unemployment rate" or SUR, and the current level is 6.7%."

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