Markets Brace for QCEW Jobs Data That May Push Fed, Impact Gold, Stocks, Dollar

QCEW Job Revisions Could Trigger Fed Policy Shift

Traders are bracing for Tuesday’s release of the Quarterly Census of Employment and Wages (QCEW), which could deliver a sharp reality check on the U.S. labor market. Wall Street economists expect a major downward revision to previously reported job gains, possibly slashing up to 1 million jobs from April 2024 to March 2025. If confirmed, the data may push the Federal Reserve to act sooner on interest rate cuts—setting up a volatile week across asset classes.

QCEW Data Seen as Highly Credible

Unlike monthly payroll reports that rely on surveys and modeling, the QCEW uses actual state unemployment insurance records, covering over 95% of U.S. wage and salary jobs. That makes it the most accurate and comprehensive jobs data available. The upcoming release is expected to show between 500,000 and 1 million fewer jobs were created than originally reported, confirming a hiring slowdown that started well before recent monthly weakness.

While the QCEW is backward-looking and released with a lag, its reliability makes it especially influential for policymakers trying to gauge labor market strength. If job creation was overstated for an entire year, it may indicate the economy has been weaker than believed for some time.

Fed Could Face New Pressure to Cut Rates

A sharp revision lower would likely increase pressure on the Federal Reserve to accelerate its easing cycle. The Fed has been cautious, balancing strong consumer spending with signs of labor market cooling. But evidence that job losses began months earlier could force a policy shift, especially as inflation continues to moderate.

That pressure could intensify politically as well. President Trump recently removed the head of the Bureau of Labor Statistics, accusing the agency of manipulating data. A weak QCEW report would likely fuel the administration’s argument that the Fed must respond quickly to deteriorating conditions.

Yields Set to Collapse as Bonds Rally Expected

Treasury markets are positioned for a significant rally if the QCEW disappoints. Bond traders would likely price in additional Fed cuts immediately, sending yields sharply lower across the curve. The 10-year Treasury yield could see its biggest single-day drop in months as investors pile into duration trades.

Rate-sensitive sectors would benefit most from falling yields, particularly utilities and REITs. Growth stocks could also rally as lower discount rates improve their relative valuations, though any gains might prove temporary if recession fears emerge.

Dollar Weakness Could Support Gold

The U.S. dollar is vulnerable heading into the report. A major revision would reduce the dollar’s rate advantage over other currencies, pressuring the DXY toward key technical support.

Gold could break higher on the combination of safe-haven flows and a weaker greenback, potentially extending its recent uptrend.

Market Forecast: Bullish Bonds, Bearish Dollar

If the QCEW confirms a major downward revision in job creation, traders should expect a bullish short-term move in bonds, with falling yields driving rotation into defensive and growth sectors. The dollar outlook turns bearish, with increased chances of a near-term breakout in gold. Volatility will likely rise across asset classes as markets reassess the Fed’s next move.

More Information in our Economic Calendar.