Last week’s employment number was weaker than expected, with 661,000 new jobs created versus an expectation of 1 million by numerous economists. The deceleration in the number of jobs returning since the dramatic COVID shutdown in March and April makes the case for more fiscal stimulus stronger. Additionally, the unemployment rate fell to 7.9% from 8.4%, however, the underlying number of jobs lost and added during the month shows the choppiness of the recovery.
Given the recent uptick in COVID cases in the U.S. and globally, the need to get assistance to strongly-hit areas of the economy grows. The benefit of stimulus before it is absolutely necessary should have a positive impact. I expect markets to trade cautiously during October as the uncertainty around the election will be front and center. I will be watching commodities and the dollar as a signal of future market actions. U.S. Treasury securities at the long end of the yield curve will be closely tracking stimulus efforts, deficits and inflation, all of which point to higher yields in the future.
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