After a torrent of labor market and business updates all week, the August employment report now acts as the decider, setting the tone for both this month's...
Friday looks set to play out like a concentrated version of what markets have been navigating all year - what's the fine balance for the U.S. economy to both dodge recession and allow interest rates to come down at the same time.
The recent re-emergence of a negative correlation between stocks and Treasury bonds may well be reinforced, insulating many mixed asset portfolios, such as 60/40 equity/bond formulations. Even though the author of the rule - ex-Fed economist Claudia Sahm - downplayed the significance of the trigger this time around, it will remain a red flag unless the rate recedes in August as expected.
The Fed has already clearly signalled its intent to start easing this month and has publicly shifted its focus away from waning inflation to the state of the jobs market, the second of its two mandates. Next on the horizon for the tech sector is Apple's expected release of its latest iPhone as soon as next week, a model expected to include new AI capabilities.
Mike Dolan Global Markets Unemployment Rate Labor Market Federal Reserve John Williams Christopher Waller
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