FRIDAY! What a day! What a speech by Jerome Powell! In case you missed it, it appears he’s laying the groundwork for a rate cut on September 17th. That had a positive effect on the Markets Friday. Equities and Mortgage-backed securities rose, and Bond yields fell.
BUT WAIT!
There are still important economic reports coming out before then, that could impact cutting, the amount cut and how many more there will be. Here are the ifs.
Inflation
We get the favorite inflation gauge of inflation the PCE on Friday and we also get a CPI and PPI before September 17th. These are indicators of pricing inflation. In his speech Powell commented that the Fed is expecting those numbers to rise and that these are impacts from tariffs and they should be temporary. So maybe a bullet dodged??
Jobs
Top line Numbers but Between the lines REVISIONS could mean allot
We get the BLS report for August on Friday September 5th. That report will be the most important piece of data we will receive that could change things. In his speech they are looking towards a weaker jobs market. That is what is fueling the opportunity for cuts. A strong jobs report could mean No cut. Rates would Jump quickly and violently higher! The market has already priced in a cut.
Thankfully, the data is leading us to believe it should be lower and there could be revisions to the last 2 months which may show negative job creation for the first time since COVID.
We have been here before, and we have been burnt Soo badly. January the market was expecting 180k for jobs and the BLS came out with 360K. Rates soared higher and it to 90 days to correct the market with revisions.
The BLS is based on a household survey. Survey being the action word. Not on data like ADP which has actual payroll records.
So, are you a gambler? Did I fire 5 or 6 shots? What’s it gonna be?
I will continue to update you as the numbers come in.
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