BofA’s Hartnett sees risk-on rally if jobs data is as expected

(Bloomberg) — Risk assets are likely to rally if the monthly US jobs report due Friday is within the range of expectations, according to Bank of America Corp. strategist Michael Hartnett.

Most Read from Bloomberg

The strategist said if the monthly payrolls data were to show the US economy added between 125,000 to 175,000 jobs last month, that would support a soft economic landing and keep bond yields in a range, sparking a risk-on trade. The median forecast of economists sees an increase of 150,000, according to a Bloomberg survey.

In a note dated Oct. 3, Hartnett said the bulls were “in control,” and that “corroborating tells” would be signs that Chinese stimulus was “working” and more easing from the Federal Reserve.

The strategist was bearish on equities last year even as the S&P 500 (^GSPC) rallied 24%. For 2024, he has stated his preference for bonds.

US stocks have stumbled in the first few days of October after rallying for five straight months, as investors assess geopolitical risks in the Middle East, global economic growth and interest rates.

Hartnett said that a “blowout” jobs report Friday showing greater than 225,000 payrolls and an unemployment rate of less than 4.1% would drive the 30-year Treasury yield above 4.5%. And jobs below 75,000 alongside an unemployment rate of above 4.3% would be “recessionary.”

BofA’s custom bull-and-bear indicator jumped to 6.0 from 5.4 in the week through Oct. 2, the biggest weekly increase since December. A reading above 8 is considered a contrarian sell indicator.

—With assistance from Christian Dass and Michael Msika.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.