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After Friday’s slightly disappointing jobs report showing slower payroll, Treasury yields moved lower across the curve closing the week at the lowest levels of the year.1 Bond investors are again pricing in an aggressive move by the Federal Reserve (Fed) toward easier monetary policy, with more than 175 basis points (bps) of Fed rate cuts expected over the next six months.2 Anything less than a 50-basis-point rate cut next week is almost certain to be viewed as a disappointment by bond investors.
Equity markets reacted negatively to the bond market signaling weaker economic growth ahead. The S&P 500 Index closed down more than 4% last week, with some of the previously high-flying large cap technology names now leading the way lower.3
This week’s economic data shifts to the inflation side of the Fed’s dual mandate. The August Consumer Price Index (CPI) report will be released Wednesday, followed by the Producer Price Index (PPI) Thursday.4 Both reports are expected to show inflation moderating back toward the Fed’s 2% target.
Sources:
1CNBC – Treasury yields fall after weak jobs report; 9/6/24
2Bloomberg
3CNBC – S&P 500 tumbles Friday to post worst week since 2023, Nasdaq drops 2% for worst weekly performance since 2022; 9/6/24
4MarketWatch – U.S. Economic Calendar; as of 9/9/24
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