Goldman Sachs “Chart of the Day: NFP Preview”, dated 8 Jan 2026)
## GS Base-Case Forecast for December Jobs Report
Goldman’s economists are essentially calling for a near-consensus, “fine not fabulous” payrolls print, with unemployment rounding a bit lower.
- Nonfarm payrolls (NFP): +70k (Dec)
- GS says this is in line with consensus.
- Unemployment rate: 4.5% (Dec) vs 4.6% (Nov)
- Rationale: November’s unrounded 4.56% was already close to rounding down.
- Also, GS expects some November-specific distortions to fade (notably furloughed federal workers returning).
- Average hourly earnings (AHE): +0.25% m/m (Dec)
- They attribute some restraint to negative calendar effects.
### What they see pushing/pulling the payroll number
A balanced set of offsets:
Supportive
- “Big data” indicators suggest a moderate pace of private job growth.
Headwinds
- Government payrolls: -5k expected, driven by -5k federal, with state/local flat.
- Construction likely slows sequentially after an outsized prior month, plus poor weather early in the survey period.
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## Event Risk & Market Pricing Mentioned
They flag how modestly the market is pricing the immediate move:
- SPX implied move through Friday close: ~0.75%
(There’s also mention that the day includes NFP and a potential Supreme Court tariff ruling, adding to event risk.)
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## “Thoughts from around GS” (Cross-Asset Takeaways)
### US Equity Strategy (Ryan Hammond)
Core message: GS expects solid equity gains in 2026, helped by a “goldilocks-ish” mix.
- Baseline: stable labor market, above-consensus growth, below-consensus inflation, and continued Fed easing.
- They think markets haven’t fully priced an early-2026 growth acceleration.
- A solid labor report could boost confidence in re-acceleration → cyclicals outperform.
- Risks/trade-offs:
- Strong data may push bond yields higher, which can cap equity upside (especially lower-quality cyclicals).
- High valuations make equities vulnerable to a very weak labor print.
- Defensive note: Health Care and Consumer Staples look cheap vs history/profitability, but have high short interest.
### Index Vol / Options (Joe Clyne)
Core message: Despite dealer positioning that should dampen moves, they think short-dated event vol looks cheap.
- Street appears long gamma (especially upside) in SPX.
- 1-day straddles pricing implies < ~50 bps move despite dual event risk.
- Preference: own gamma over vega into the event; sees short-dated straddles as underpriced, especially for a negative surprise.
- Where clients are looking: “broadening” trade with interest in RSP and IWM.
- IWM upside viewed as cleaner since it has a similar vol hurdle to SPX but less dealer-gamma “overhang”.
- Hedging idea: short-dated VIX calls/call spreads (Jan/Feb); “vol of vol” seen as still cheap.
### 💱 FX Strategy (Karen Fishman)
Core message: Their base-case (around-consensus jobs + UE rate rounding down) is pro-cyclical.
- Likely market reaction in base case: slightly better growth pricing, some reduction in near-term Fed cut odds, but no hawkish pivot narrative.
- FX implications: pro-cyclical FX outperform (AUD, NZD, SEK, high-beta EM).
- Trade idea highlighted: short CAD/ZAR (with some caution due to a recent sharp move).
- JPY tends to underperform on a positive growth shock (yields + equities up), but USD/JPY upside could raise intervention risk concerns.
- Asymmetry:
- Big upside surprise → cuts priced for the year can be questioned fast.
- Big miss → recession risk reprices from low levels.
- EUR could be among bigger movers in tails (weaker on beat, stronger on miss), though JPY is even more sensitive on a miss.
### Thematics / Baskets (Louis Miller)
Core message: AI productivity may mean less labor intensity over time, changing how payrolls map to equity performance.
- Notes tech’s share of total US employment has fallen since ChatGPT’s public release (~3+ years).
- If AI productivity scales, corporate headcount reductions could drag payrolls in 2026–27.
- Trade preference: long AI Productivity basket (GSXUPROD) into 4Q earnings on the “strong economy / less-strong labor” narrative.
- Also likes a depressed cyclicals basket: slowing labor keeps Fed supportive, but growth supports reflation.
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## Practical Takeaways
- GS base case: modest NFP (+70k), unemployment rounding down to 4.5%, earnings +0.25% m/m.
- Market setup: SPX implied move ~0.75%; desk thinks short-dated options may be too cheap given event stack.
- If data is solid: helps cyclicals/broadening; pro-cyclical FX bid; watch yields as a limiter.
- If data is weak: negative surprise could move fast if market shifts away from “dealer long strikes”; recession-risk repricing possible.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!