US jobs data: why good news might not be positive for markets Analysts have delved deeper into the conundrum. According to Jim Reid and Colin Tan at Deutsche Bank, a jobs number close to or above 200k on Friday will "intensify the tapering debate over the next few weeks" and is "unlikely to be risk positive." So, expect a fall in the markets. They said in a note this morning: There will be some offset from the strengthening of the recovery. However we think the tapering fear will dominate in a risk off trade. Analysts at Societe Generale are more upbeat. Brian Jones, senior US economist, predicts that if the number climbs above 210,000, as it forecasts, the stock market will jump "due to the positive surprise element" and drive an "impetus for risky assets." Mr Jones and his team said in a note this morning: We expect the S&P to increase by 0.3pc and the 10Y USD swap rate to move up by 2bp in the first half-an-hour after the data release. According to Deutsche Bank, a big miss would be the most likely cause for stock markets to jump. Mr Reid and Mr Tan predict that a number between 75,000 and 150,000 will be the "sweet spot" for markets as the Fed could be forced to wade in to pump more money into the economy. "Bonds will likely rally taking the risk complex with it," they said. But there is a tipping point. A number below 75k would "definitely reduce taper fears but might worry markets on growth and is unlikely to be as positive as a number between 75-150k," said Mr Reid and Mr Tan. Analysts at Bank of America said there is a 60pc chance that the number will come in just below consensus, at 140,000, which is its baseline scenario for QE being tapered off next April. They added: An imminent tapering would require >250K on payroll and 3.5pc GDP growth. In contrast, additional QE would require <90K on payroll and 1.5% GDP. Revisions Revisions add another dynamic to the report, as Deutsche Bank highlights. The last payrolls report in early May showed significant upward revisions in February (332k v 268k) and March (138k v 88k). May payroll figures have also been weak compared with data for the rest of the year. Mr Reid and Mr Tan said: Since 1993, the average and median monthly payroll number has taken a notable turn lower over the summer months (between June and August). Indeed the average final payroll print for June, July and August since 1993 were 81k, 91k and 75k respectively and are meaningfully lower than averages seen throughout the rest of the year. This is perhaps more of a topic for the next 3 months but we also noticed that May payrolls have fallen short of market consensus three years in a row with an average miss of about30k. We've no way of knowing whether this will repeat but tapering decisions could be made on numbers that could either be heavily revised or seasonally distorted. This adds to the complexity of markets at the moment.