Jobs Report Fails to Provide Clarity on Interest-Rate Path

Jobs Report Fails to Provide Clarity on Interest-Rate Path By Hardika Singh

Friday's jobs report showed that the economy added fewer jobs than expected in August but the unemployment rate slipped. Stocks and bond yields fell in response.

While the report cemented hopes of an interest-rate cut at the Federal Reserve's coming meeting, it did little to provide insight into the magnitude of the cut needed. Traders remain split on whether the Fed will cut rates by 25 or 50 basis points.

This week, investors will keep an eye out for the consumer-price index on Wednesday and producer-price index on Thursday.

Read on for this news and more.

Top News Jobs Slowdown Frustrates Investors Who Wanted Certainty on the Fed

The August jobs report was just good enough to keep markets guessing what the Federal Reserve will do this fall. That could be a problem, writes WSJ's Aaron Back . The Labor Department said Friday that the U.S. economy added 142,000 jobs last month, below expectations for 161,000 but up from the prior month. The unemployment rate ticked down to 4.2% from 4.3%. But beneath the surface there were more worrying signs.

Hiring Softened This Summer, Teeing Up Fed Rate Cuts U.S. Economy The State of America's Wallet

If you want to know how Americans are doing, look in their wallets . They have more money in the bank than they did in 2019, even after adjusting for inflation, and just slightly less credit-card debt relative to income.

But they generally don't feel better off financially than they did five years ago, before the turmoil of the pandemic, inflation and rising interest rates. Heavier wallets have lightened the mood, though.

Key Developments Around the World 'Super Mario' Draghi Pitches Radical Change to Fix Europe's Economy

Mario Draghi wants to rescue Europe again . The 77-year-old former European Central Bank president, famous for his pledge to "do whatever it takes" to save the euro during Europe's debt crisis, on Monday delivered his prescription for jump-starting Europe's sluggish economy and strengthening its defense industry.

China Still Isn't Seeing Much Inflation

China's consumer inflation picked up amid supply constraints caused by abnormal weather, though the reading is unlikely to shake off concerns around limp demand and other pressures facing the world's second-largest economy.

Attacks on RBA's Independence a Diversion, BlackRock Says

Recent criticism of the Reserve Bank of Australia by the country's center-left Labor government is a diversion from the fact that Canberra's record spending is itself playing a big part in keeping inflation high, says BlackRock, the world's biggest investment firm.

Financial Regulation Iraqi Banks Used U.S.-Created System to Funnel Funds to Iran

The New York Fed's process to move Baghdad's oil earnings lacked key money-laundering safeguards , resulting in illicit transfers that financed terrorist groups for years.

Crypto Plan Creates Potential Conflicts for Trump

Republican presidential candidate Donald Trump has been stepping up his efforts to court the money and votes of the crypto industry. His latest attempt: a digital-currency project called World Liberty Financial. While details about the project are scant, the team behind it said this week that it will focus on "spreading U.S.-pegged stablecoins around the world" and ensuring the dominance of the U.S. dollar.

Morgan Stanley Is Fined Over First Republic Insider Sales

In the months before it failed last year, the executive chairman of First Republic Bank sold more than $6.8 million worth of stock through Morgan Stanley. The bank has now settled an investigation that determined it failed to properly monitor the trades.

Morgan Stanley agreed to pay $2 million to settle the investigation by the Massachusetts securities regulator. The bank neither admitted nor denied wrongdoing.

JPMorgan Plans to Report Customers Who Exploited TikTok 'Glitch' to Authorities

JPMorgan Chase is investigating thousands of incidents of possible check fraud committed as part of a TikTok craze and plans to share the evidence it gathers with police departments around the country.

Forward Guidance Monday (all times ET)

10 a.m.: Employment Trends Index

10 a.m.: Monthly Wholesale Trade

3 p.m.: Consumer credit

Tuesday

6 a.m.: NFIB Index of Small Business Optimism

9:30 a.m.: U.S. SEC Chair Gary Gensler speaks at PIIE event

10 a.m.: Brookings Institution 'The Basel III endgame' event with Fed Vice Chair Michael Barr

Research August Payrolls Show Fed Won't Need to Panic

The Fed "won't need to panic and start with a 'jumbo' rate cut," Independent Advisor Alliance's Chris Zaccarelli says in a note about the 142,000 headline payrolls figure and slight decrease on unemployment to 4.2%. The Fed is likely to cut rates by 25 basis points later this month, he says. "Given the weaker-than-expected, but not falling-off-a-cliff numbers...it's unlikely that a 50 bps cut is necessary," Zaccarelli says. He expects the Fed to keep a "measured pace" of 25-b.p. cuts for the rest of the year. The data, he says," still show an economy that is expanding and not one that is imminently headed into recession." - Paulo Trevisani

Basis Points On Thursday, Donald Trump pledged to New York's business elite that he would "once again turn America into the manufacturing superpower of the world." To do so, he said, he would cut the corporate tax rate to 15% from 21% for companies that make their products in the U.S., and expand tariffs on foreign-made goods. The proposal raised immediate questions from economists, corporate leaders and others. Among them: What counts as American-made? And would his plan spur manufacturing, or launch a costly trade war? - Jeanne Whalen, Richard Rubin, Chip Cutter and Chao Deng CIBC Capital Markets economist Andrew Grantham says the Bank of Canada could face pressure to accelerate the pace of interest-rate cuts the closer the unemployment rate reaches the 7% threshold. Canada's unemployment rate rose in August to 6.6% from 6.4%. CIBC had forecast that the jobless rate would peak at 6.6%. - Paul Vieira The Japanese economy grew almost as fast as initially estimated in the April-June quarter thanks to a spending recovery, keeping the Bank of Japan on track for another rate increase in the near future. - Megumi Fujikawa China's foreign-exchange reserves rose last month , boosted by a valuation gain from a weaker U.S. dollar amid prospects for rate cuts by the U.S. Federal Reserve. About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [hardika.singh@wsj.com].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

September 09, 2024 07:46 ET (11:46 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.