Unemployment rate tests labor slack

The unemployment rate is the cleanest single number for whether the jobs market is loosening or still tight. The consensus is 4.3%, the same as last month, so even a small move would matter if it changes the tone of the whole jobs report.

Investors care because this line sits right at the center of the soft-landing debate. If unemployment starts edging higher without a collapse in payrolls, markets may read that as the kind of cooling the Fed can live with.

• A drop below 4.3% would say the labor market still has some tightness in it. That can be mildly hawkish for rates, especially if payrolls and wages are also firm.

• A rise above 4.3% would support the case that slack is slowly building. That usually helps bonds and rate-sensitive equities, but the market will watch how fast it rises, because a sharp move would bring growth fears back into the conversation.

• An exact 4.3% print would probably leave traders looking at the other jobs details instead. On its own, a flat unemployment rate is more of a confirmation signal than a market mover.

This is a direct read on rate pressure. A higher unemployment rate can make future cuts look more likely; a lower one can keep yields from falling.