Wall Street flattened on the first trading session in September.
Today’s job market reports have increased the potential for increasing monetary policy. According to the FED rate monitor tool, there is an 88% chance that the U.S. Federal Reserve officials will keep raising interest rates at the previous level of 25 basis points at the next meeting and the next that follows. Despite last week’s slowing JOD report, the Bureau of Statistics confirms that the August opening jobs number has beaten market expectations.
Economists were expecting to see a print of 170.000 at 8:30 a.m. this morning. Yet unfortunately, the U.S. labor market added roughly 187,000 jobs in August, slightly higher than the previous month’s print of 157.000. In the past three months, the U.S. labor market has been adding workers steadily at an average of 186,000. And that is the lowest hiring rate over the past 2 years. Considering the fact that the central bank has lifted its key interest rates 11 consecutive times since March 2022, The longest inflation rate series ever
Part of the monetary policy strategy is the soft landing, which is lifting interest rates higher to cool down inflation. But at the same time maintaining a cooling in the labor market. One reason is that the demand for work increases. Companies will have to push wages higher due to the workers’ demands, and therefore their services and products will go higher to make up for higher costs.
The Federal Reserve aims to control inflation by raising interest rates and has been looking for signs of a less tight job market. Recent data suggests the Fed’s desired outcome is occurring, as labor demand appears to be moderating. For instance, the ADP jobs report for August revealed the lowest job additions in five months, indicating a decrease in labor demand.
As for the unemployment rate, investors were betting on it hitting 3.5%, the lowest level in the past 50 years. In a shocking result, the U.S. unemployment rate came in higher than expected. The number rose to 3.8%, rising by 0.3% from previous expectations. ‘
On the subject of the U.S. soft landing strategies, analyst Christopher Robb has commented on that. He says something in line with a soft-landing narrative that continues the trend from the last three reports.”
Based on today’s news, the Wall Street index was flat, the S&P 500 benchmark swung up and down between negative and positive gains, the Dow Jones Industrial Average was slightly higher by 0.08%, and the tech-heavy Nasdaq declined by 0.13%.
Meanwhile, investors anticipate the U.S. economy to grow modestly at less than 2% annually for the next 5–10 years. Inflation expectations in the bond market for the same period are around 2.25%–2.30%. This suggests that investors believe the Federal Reserve will aim to keep inflation close to its 2.00% target in the coming decade.