Wall Street’s main indexes were poised for a sharply lower open on Friday after a strong jobs report deepened fears that interest rates may stay elevated for an extended period.
The Labor Department’s report showed non-farm payrolls increased by 336,000 jobs in September on a monthly basis, against expectations of 170,000 additions, according to a Reuters poll of economists.
Unemployment rate stood at 3.8% against expectations of 3.7%, while average hourly earnings increased 0.2%, compared with estimates of 0.3%.
The S&P 500 eyed its fifth straight weekly fall, while the Dow is on track to decline for the third straight week.
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This week we get Central Bank Decisions from the Bank of England, The Federal Reserve and the Bank of Japan. The European Central Bank delivered a 10th consecutive hike last week, though signaled that the peak may have been reached. We also are getting further floods of data, and we know that Central Bankers are being data dependent, perhaps too much so.
For example, a Bank of Canada official said she sees evidence higher rates are working to cool the economy, blaming a hotter-than-expected inflation reading on monthly volatility driven in part by energy and rental costs.
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New US inflation numbers came out, and they included at least some reasons for concern. The headline figure deteriorated for the first time in months rising 0.6% in the month and 3.7% year on year. The broadest picture, breaking down into food, energy, and core services and goods excluding food tells the story.
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New US inflation numbers came out, and they included at least some reasons for concern. The headline figure deteriorated for the first time in months rising 0.6% in the month and 3.7% year on year. The broadest picture, breaking down into food, energy, and core services and goods excluding food tells the story.
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In our weekly market update we look at the latest signals from Jackson Hole, plus market reaction to the tech results, and forward expectations for rates and markets. Meantime in China, expect deposit rates to be cut, while in Australia, market weakness and a weak AUD does not bode well.
We must expect rates higher for longer – so when will the markets adjust?
A key measure of US consumer prices rose only modestly for a second month, bolstering hopes that the Federal Reserve can tame inflation without sparking a recession. But the results hardly moved markets at all, bearing in mind the next FED meeting is in September to more data will be to hand. The core consumer price index, which excludes often-volatile food and energy costs, rose 0.2% for a second month, Bureau of Labor Statistics data showed Thursday. That marked the smallest back-to-back gains in more than two years.
Economists view the core measure as a better indicator of underlying inflation than the overall CPI, which also increased 0.2%. The annual CPI measure, however, picked up slightly due to a less-favorable comparison with the index a year ago.
Or in other words, the past help from the base effect is diminishing. The progress on inflation, combined with solid economic growth and a healthy but gradually cooling labor market, represent another step in the right direction for the central bank. The highest interest rates in 22 years have played a role in calming price pressures but have yet to tip the nation into a recession many economists once thought was inevitable.
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A key measure of US consumer prices rose only modestly for a second month, bolstering hopes that the Federal Reserve can tame inflation without sparking a recession. But the results hardly moved markets at all, bearing in mind the next FED meeting is in September to more data will be to hand. The core consumer price index, which excludes often-volatile food and energy costs, rose 0.2% for a second month, Bureau of Labor Statistics data showed Thursday. That marked the smallest back-to-back gains in more than two years.
Economists view the core measure as a better indicator of underlying inflation than the overall CPI, which also increased 0.2%. The annual CPI measure, however, picked up slightly due to a less-favorable comparison with the index a year ago.
Or in other words, the past help from the base effect is diminishing. The progress on inflation, combined with solid economic growth and a healthy but gradually cooling labor market, represent another step in the right direction for the central bank. The highest interest rates in 22 years have played a role in calming price pressures but have yet to tip the nation into a recession many economists once thought was inevitable.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
This year’s $6.5 trillion rally in stocks hit a wall, following hot labor-market data and a ramp-up in Treasury issuance just a day after a US credit downgrade by Fitch Ratings.
As a result, Wall Street finished lower on Wednesday, with the S&P 500 and Nasdaq Composite down for a second straight day as investors took profits on five months of gains a day after rating agency Fitch cut the U.S. government’s credit rating.
Fitch downgraded the United States to AA+ from AAA late on Tuesday, citing expected fiscal deterioration over the next three years as well as growing government debt. Fitch was the second major agency to cut the country’s rating. In 2011 Standard & Poor’s stripped the country of its triple-A grade.
Pushing back hours before her department is set to ramp up its borrowing to plug a ballooning budget deficit, Treasury Secretary Janet Yellen called the downgrade “arbitrary” and “outdated.” The economy has recently shown signs of resilience and the debt limit was ultimately lifted, she noted.
The US budget deficit surged to record levels when the government spent heavily to support households and businesses as Covid shut down the economy. It shrank last year, but now it’s widening again. The federal deficit hit $1.4 trillion for the first nine months of the current fiscal year, almost triple the year-earlier figure. The US Treasury this week boosted its borrowing forecast for the current quarter to $1 trillion, well above the $733 billion it had predicted in May.
Fitch’s downgrade is a signal that the US needs to get its budgetary process in order ahead of what looks like another political fight this fall, and possibly another government shutdown.
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Today’s post is brought to you by Ribbon Property Consultants.
The Fed lifted rates again on Wednesday to a 22-year high, and pretty much repeated the statement from last month. But there is an expectation of higher rates for longer, and that inflation would be above target for the next couple of years.
The market reacted as expected, given the hike was well signaled, but lifted the probability of another hike this year a little, but that will be determined by incoming data. The Fed meets again late September.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
Digital Finance Analytics (DFA) Blog
Another 2-Years Above Target Inflation Says The Fed! [Podcast]
The Fed lifted rates again on Wednesday to a 22-year high, and pretty much repeated the statement from last month. But there is an expectation of higher rates for longer, and that inflation would be above target for the next couple of years.
The market reacted as expected, given the hike was well signaled, but lifted the probability of another hike this year a little, but that will be determined by incoming data. The Fed meets again late September.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
