It’s employment report Friday, which gives us one of the most watched, one of the most revised and one of the most misunderstood data figures on the planet.

Nevertheless, it’s also an undeniable fact the non-farm payrolls data have the highest global weighting of all indexes that matter and that on many occasions “instantly” impact markets in spite of their “known” imprecision.

Anyway, the data should continue to show what it has been showing for some time, which is a labor market that is tightening, at least for skilled and semi-skilled workers. 

Interestingly, the bigger challenge in several sectors of the economy is not the struggle to find work, but the struggle to find people to fill the huge number of job vacancies.

As the Fed’s “beige book” already noted this situation is leading to selective increases in wage pressures while full-time employment wages are growing at a good pace.

All this raises the question what this means for the Federal Reserve.

San Francisco Fed President Williams recently pointed out that the data dependency of the Fed in terms of what a Central Banker or an economist thinks about it does not mean that every single data release causes a change in policy perspective.

He also stated: “…market responses to news are negligible, and there is no evidence of a return to data dependency in market behavior…”

Central Bankers and economists know very well that data are imprecise. Indeed, they are increasingly becoming imprecise.

They also know very well economic modeling is imprecise and it has always been imprecise and therefore, economists more than Central Bankers deal in trends.

At present, the trend in the United States is of rising employment and of rising inflation pressures,

No doubt these trends will dominate the debates in monetary policy circles in the coming months.

One data point, up or down, is simply not important to that story.

Interestingly, Dallas Fed President Robert Kaplan said: “I believe that excessive accommodation carries a cost in terms of distortions and imbalances in hiring, asset allocation and investment decisions, I also believe that, at this juncture, the Fed needs to show patience in decisions to remove accommodation. Again, this is particularly true in light of key global secular trends as well as recent developments relating to slowing global economic growth and tightening financial conditions.”

In simple words and if it was up to Mr. Kaplan it would be “lower for longer,” which is in fact in complete accordance with what markets expect.

Markets expect, at least so far, only one rate hike in December this year.

Besides all that and away from the data we have the noise coming out of Asia where markets seem to have decided it is “risk-on” again and green dominates the landscape.

Why have they decided this? Well, maybe because they were fed-up with “risk-off”…

For the moment markets seem wanting to go on with further gains in equities and currencies while the rational market hypothesis is lying in shattered fragments once again.

Long-term investors should try never to forget these kind of market moves can only be considered as good market moves once they are representing a return to a more fundamentally determined assessment of where the world is going.

A rising market is only good if it brings the market closer to a fair economically driven fundamental value…

Finally, there is also politics in many places. We have the U.S. presidential race, strong words in Europe over the U.K. referendum and the Chinese People’s Congress.

Never forget, markets are bad in understanding politics, but it also must be said politics are pretty bad in making themselves understood, as is the case at this moment.   

Etienne "Hans" Parisis is a bank economist who has advised global billionaires and governments on the financial markets and international investments. To read more of his articles, GO HERE NOW.