NFP Preview - February 11, 2026
Key Takeaways
The article discusses the upcoming release of the US labor market report for January, which is crucial for understanding the current state of the US economy. This report is particularly significant as it follows disappointing retail sales data for December, which has already affected US stock performance and Treasury yields.
Delayed Labor Market Data
The focus is on the delayed labor market data, with economists anticipating a significant downward revision of 825,000 in US job creation for 2025. Such a revision could indicate a much weaker job market than previously expected, raising concerns about future economic growth.
Potential Causes for Job Growth Slowdown
Interestingly, the article notes that such large downward revisions typically occur during recessions, yet the US economy is currently experiencing robust growth, with Q4 GDP expected at 2.9%. This raises questions about whether the job market's performance is an early sign of economic trouble, a result of AI and productivity gains, or indicative of an unusual economic cycle.
Impact of Immigration Policies
The tightening of US immigration policies since late 2024 may also be contributing to the slowdown in job growth. Despite a grim outlook from the payrolls report, the unemployment rate has been slowly increasing but remains historically low. This discrepancy suggests that reduced immigration could be significantly impacting the labor market.
Future Implications for Federal Reserve Policy
The unemployment rate will be a critical indicator in the coming months, as it will help assess whether labor demand is keeping pace with supply. A continued rise in unemployment could signal a deteriorating economic picture, influencing future Federal Reserve policy decisions.
Market Expectations
Investors are keenly awaiting the labor market report, as a weak jobs picture could bolster expectations for rate cuts by the Federal Reserve, potentially boosting the US stock market. Following the disappointing retail sales data, the interest rate futures market has adjusted expectations for rate cuts, now anticipating 2.4 cuts by the end of the year.
AI Trade and Economic Data
The article also touches on the impact of AI on the stock market, noting that sectors affected by AI challenges may benefit from potential Fed easing if the labor market report is weak. However, concerns about economic growth could complicate the performance of AI-related stocks, as businesses may accelerate AI adoption to cut costs in a slowing economy.
Conclusion
Overall, the upcoming labor market report is poised to have significant implications for both the US economy and market sentiment, particularly regarding Federal Reserve policy and the performance of various sectors influenced by AI advancements.