“I think it would take a really, really strong number to dislodge markets from this belief that the Federal Reserve will cut rates in a couple of weeks.” – 04:03
Michael Reinking, Senior Market Strategist at the NYSE, joins Remy Blaire to discuss the significant economic indicators that are influencing the Federal Reserve’s near-term outlook, particularly focusing on the upcoming nonfarm payrolls report for August. As September begins, a month historically known for negative returns in equity markets, Remy discusses the current market sentiment, which is reflected in the declines across futures for the Dow, S&P 500, and Nasdaq.
Together, they explore the factors contributing to the current market downturn, including recent weaknesses in the AI sector following announcements from Alibaba and the notable rise in long-term yields globally. With the 30-year yield testing the 5% level and 10-year yields around 4.3%, they analyze how these shifts are impacting investor sentiment.
Remy and Michael highlight the importance of the labor market data set to be released, including ADP, JOLTS, and the highly anticipated nonfarm payrolls report. Michael emphasizes that Friday’s jobs report is crucial, with the market expecting around 75,000 jobs to be added. They discuss the implications of recent negative revisions to previous data and how these figures could affect the Fed’s narrative regarding potential rate cuts.
The conversation also touches on the upcoming annual revisions to payroll figures, with estimates suggesting substantial negative revisions that could further indicate a weakening labor market. Michael shares his insights on how this data might influence market expectations for the Fed’s actions in September.