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.
Sources:
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
< Go to Monday Morning Perspectives
This blog post is for informational use only. The views expressed are those of the author(s), and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.
Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client. Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.
Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice. The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete. Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements. Actual results may differ significantly. Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.
Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.
High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.
All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.
