Fed ‘likely’ to cut rates before regular September meeting: Jefferies
The long-anticipated moment of a significant shift in the US labor market has arrived, signaling a potential Federal Reserve rate cut before the regular September meeting, Jefferies analysts said in a note to clients on Monday.
Recent data revealed “unambiguous evidence of a weakening in the US labor market at a time when inflation is still above the Federal Reserve’s 2% target.”
The labor market report for July showed a mere 114,000 increase in nonfarm payrolls, the second-lowest since December 2020.
Jefferies notes that the government and healthcare and social assistance sectors accounted for 71% of this growth. Moreover, excluding the net birth-death model adjustment, nonfarm payrolls actually declined by 1.16 million on a non-seasonally adjusted basis.
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US economy will avoid recession; Fed to cut rates by 100 bps by year-end: UBS
UBS analysts are confident that the US economy will achieve a soft landing, despite recent weaker-than-expected economic data.
UBS states that “recent data on both inflation and the labor market has surprised to the downside,” prompting the firm to adjust its forecast for Federal Reserve rate cuts.
Following disappointing labor market reports for July, including nonfarm payrolls rising by just 114,000—well below the anticipated 175,000—UBS now expects the Fed to implement more aggressive rate cuts. The unemployment rate increased to 4.3%, and the U-6 underemployment rate climbed to 7.8%.
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US stocks in sell off mode as economic concerns mount
U.S. stocks were in selloff mode Monday as growing concerns over an economic slowdown put squeeze on high-flying technology stocks.
At 14:53 ET (18:53 GMT), the Dow Jones Industrial Average fell 1011 points, or 2.5%, the S&P 500 dropped 3.1%, and the NASDAQ Composite slumped 3.8%.
Slowdown fears batter Wall Street, but economic data shows underlying strength
These hefty losses followed on last week’s selloff on fears of an economic slowdown.
A string of weak readings ramped up concerns that the Federal Reserve had kept interest rates at elevated levels for too long, and that chances of a soft landing for the economy were fading.
This notion came to a head on Friday after nonfarm payrolls data for July missed expectations by a wide margin, indicating a substantial cooling in the labor market.
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Unwind of 2024’s winning trades batters global markets as growth fears spike
From massive U.S. tech stocks to bitcoin, a spasm of economic worries is forcing an unwind of the year’s most popular trades, leaving investors to determine how much more downside could lay ahead.
The rout has sparked some stunning market moves: the S&P 500 is down over 5% since last Wednesday, set for its biggest three-day drop in more than two years. Japan’s Nikkei has tumbled nearly 20% while bitcoin has slid 15%. Meanwhile, popular safe-haven assets such as U.S. government bonds and the Swiss franc have surged.
Some market participants have pointed out that equity weakness often provides a normal reset, especially for a market that had charged ahead for months with little pause. Market pullbacks of 5% or more in the S&P 500 have occurred an average of three times a year since 1936, according to BofA Global Research.
Others, however, believe there is more volatility to come, and urge caution.
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