The September employment report released by the U.S. Bureau of Labor Statistics on Friday, which showed more than 260,000 new jobs created and a decline in the unemployment rate to near record-low levels, would normally be welcome news for the Federal Reserve (Fed) and investors. These are not normal times, however.
Financial markets sold off sharply on the news, as investors priced in higher odds of another 75-basis-point rate hike at the upcoming November Fed meeting. The 10-year Treasury note yield rose for the 10th consecutive week and is fast approaching the 4% level,1 while the S&P 500 Index declined by more than 100 points on Friday, nearly giving back last week’s gains. 2
The focus for this week’s economic data will shift from employment to inflation, with the Producer Price Index (PPI) out Wednesday and the Consumer Price Index (CPI) out Thursday. The core CPI number will be closely watched after last month’s surprising uptick. Any chance of a smaller rate hike next month will likely depend on better-than-expected inflation prints this week.
1 Source: Fortune- Stock market plunges after a ‘frustrating’ jobs report gives ammo to hawkish Fed amid recession fears; 10/7/2022
2 Source: TV News Check- Dow Drops 630, Nasdaq Loses 420, S&P Falls 105; 10/7/2022
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