The Markets What the jobs report means for markets
Sep 6, 2024
Simon Dangoor, the Head of Fixed Income Macro Strategies at Goldman Sachs Asset Management, joins Chris Hussey to dissect the latest jobs report. They delve into the mixed signals of the report—falling unemployment against slowing hiring—and its implications for the Federal Reserve and investors. The discussion covers curve steepening in the current economic context, potential interest rate cuts by the Fed, and strategies for navigating investment decisions amid changing market conditions. Dangoor emphasizes a cautious approach as economic trends evolve.
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Mixed Jobs Report
- The jobs report shows a slowing hiring rate, with a 142,000 increase in non-farm payrolls and unemployment falling to 4.2%.
- While slightly below expectations, the report is calming given concerns from the July numbers.
Economic Outlook and Fed's Role
- The current economic situation suggests a soft but stable level of around 2% growth or slightly below, with the labor market adjusting.
- The Fed may not need to maintain tight rates, allowing interest-rate-sensitive sectors like housing to recover.
Fed's Next Move on Rates
- Given the high starting point of policy rates, the Fed may consider 50 basis point cuts to return to a neutral setting more quickly.
- The decision between 25 and 50 basis point cuts in September is uncertain, depending on the Fed's assessment of the macroeconomy.