“However you do slice it, it’s coming out in a way that reinforces this narrative of a weaker labor market, but not yet so weak that it’s affecting a lot of other economic activity.” – 02:52
Steve Sosnick, Head Trader of IBKR Securities Services, joins Remy Blaire at the New York Stock Exchange to discuss the current state of the U.S. markets following the release of the August jobs report. The episode opens with Remy noting that U.S. markets are in positive territory, despite the report indicating a slowdown in labor market growth. She highlights the 84% probability of a 25 basis point rate cut by the Federal Reserve on September 17th, emphasizing that September is historically a volatile month for markets.
Remy and Steve delve into the details of the jobs report, which shows nonfarm payrolls coming in weaker than expected and the unemployment rate rising to 4.3%. Steve describes the data as a “Goldilocks number,” suggesting it is bad enough to increase expectations for rate cuts but not so dire as to cause significant concern about the economy. He explains that the market’s narrative remains intact, as the data does not disrupt the stock market’s preferred outlook.
The conversation shifts to upcoming economic indicators, including revisions for nonfarm payrolls and CPI and PPI data. Steve points out that labor market data is less frequent than price data, making it more scrutinized and impactful on market sentiment. He notes that the current narrative suggests a weaker labor market, but not weak enough to affect broader economic activity.
Remy then asks Steve about the performance of various assets, including the 10-year Treasury yield, which is around 4.08%, and gold, which continues to rise after hitting record highs. Steve remarks that the S&P 500’s recent all-time highs are less about specific numbers and more about maintaining a positive upward trend. He emphasizes that as long as the market narrative supports growth, investors remain optimistic.
The discussion also covers the bond market, particularly the concerns surrounding overseas bonds in countries like France and Japan, where rising deficits are leading to increased bond issuance. Steve likens the U.S. bond market to the “cleanest dirty shirt in the laundry bin,” suggesting that while the U.S. has its own deficit issues, it is viewed as a relatively safer investment compared to other nations.