By using this site, you agree to the Privacy Policy and Terms of Use.
Accept

News Junction

Notification Show More
Font ResizerAa
  • Home
  • World News
    World NewsShow More
    Guide to Pope Leo XIV’s inauguration
    Guide to Pope Leo XIV’s inauguration
    May 17, 2025
    ‘He’s the chosen one’: Meet the 14-year-old British boxer now fighting for Bahrain | World News
    ‘He’s the chosen one’: Meet the 14-year-old British boxer now fighting for Bahrain | World News
    May 17, 2025
    Trump’s Gulf Tour: The Money Deals, the Diplomacy and What Comes Next
    Trump’s Gulf Tour: The Money Deals, the Diplomacy and What Comes Next
    May 17, 2025
    ‘I cannot stand by’: Former ambassador denounces Ukraine shift under Trump | Donald Trump News
    ‘I cannot stand by’: Former ambassador denounces Ukraine shift under Trump | Donald Trump News
    May 17, 2025
    Trump says ex-FBI director called for his ‘assassination’ — RT World News
    Trump says ex-FBI director called for his ‘assassination’ — RT World News
    May 17, 2025
  • Business
    BusinessShow More
    Ukraine blows up bridges to consolidate its positions in Russia
    Ukraine blows up bridges to consolidate its positions in Russia
    August 18, 2024
    Commentary: AI phones from Google and Apple will erode trust in everything
    Commentary: AI phones from Google and Apple will erode trust in everything
    August 18, 2024
    The most famous Indian Dishes – Insights Success
    The most famous Indian Dishes – Insights Success
    August 18, 2024
    Life on the road as a female long rides cyclist
    Life on the road as a female long rides cyclist
    August 18, 2024
    UK inflation rises to 2.2%
    UK inflation rises to 2.2%
    August 18, 2024
  • Cryptocurrency
    CryptocurrencyShow More
    BTC, ETH, XRP, BNB, SOL, DOGE, ADA, SUI, LINK, AVAX
    BTC, ETH, XRP, BNB, SOL, DOGE, ADA, SUI, LINK, AVAX
    May 17, 2025
    Altcoins are on the verge of ‘most powerful rally’ since 2017 — Analyst
    Altcoins are on the verge of ‘most powerful rally’ since 2017 — Analyst
    May 17, 2025
    Tokenization makes investing more accessible — Robinhood exec
    Tokenization makes investing more accessible — Robinhood exec
    May 17, 2025
    World Liberty Financial brushes off oversight concerns from Congress
    World Liberty Financial brushes off oversight concerns from Congress
    May 17, 2025
    Onyxcoin price soars as 24-hour volume explodes 600%
    Onyxcoin price soars as 24-hour volume explodes 600%
    May 17, 2025
  • Technology
    TechnologyShow More
    How to Improve Your Spotify Recommendations
    How to Improve Your Spotify Recommendations
    August 18, 2024
    X says it’s closing operations in Brazil
    X says it’s closing operations in Brazil
    August 18, 2024
    Supermoon set to rise: Top tips for amateur photographers | Science & Tech News
    Supermoon set to rise: Top tips for amateur photographers | Science & Tech News
    August 18, 2024
    Scientists Want to See Videos of Your Cat for a New Study
    Scientists Want to See Videos of Your Cat for a New Study
    August 18, 2024
    OpenAI’s new voice mode let me talk with my phone, not to it
    OpenAI’s new voice mode let me talk with my phone, not to it
    August 18, 2024
  • Entertainment
  • Sports News
  • People
  • Trend
Reading: Powell faces a market mutiny if he doesn’t make a September rate cut—Wall Street has ‘locked in’ timings after unemployment concerns
Share
Font ResizerAa

News Junction

  • World News
  • Business
  • Technology
  • Cryptocurrency
  • Trend
  • Entertainment
Search
  • Recent Headlines in Entertainment, World News, and Cryptocurrency – NewsJunction
  • World News
  • Business
  • Cryptocurrency
  • Technology
  • Entertainment
  • Sports News
  • People
  • Trend
Have an existing account? Sign In
Follow US
News Junction > Blog > Business > Powell faces a market mutiny if he doesn’t make a September rate cut—Wall Street has ‘locked in’ timings after unemployment concerns
Powell faces a market mutiny if he doesn’t make a September rate cut—Wall Street has ‘locked in’ timings after unemployment concerns
Business

Powell faces a market mutiny if he doesn’t make a September rate cut—Wall Street has ‘locked in’ timings after unemployment concerns

Published August 5, 2024
Share
7 Min Read
SHARE

Following the last Federal Open Market Committee meeting, chairman Jerome Powell left the door open for holding interest rates where they are—at 5.25%-5.50%—until December before beginning to bring them down.

But Friday’s job report came in far cooler than expected. The U.S. added only 114,000 jobs in July, the Bureau of Labor Statistics said on Friday, well below expectations of approximately 175,000. The unemployment rate went up to 4.3% on the expectation that it would stay flat at 4.1%.

Now questions are mounting as to whether the Fed has left it too late.

International markets—looking nervously at the world’s biggest economy—have been tumbling ever since: At the time of writing Japan’s Nikkei 225 is down more than 12%, its worst day since the ‘Black Monday’ of 1987. Europe’s regional Stoxx 600 is down 2.55% at the time of writing with U.S. futures also taking a hit.

The unexpected drop in the jobs number caused analysts to quickly revisit their projections for the rest of the year.

Previously Bank of America had been certain the first cut would come in December but on Friday the lackluster jobs report was enough to bring its expectation forward to September.

“The bottom line is that the weaker-than-expected July employment report led us to change our baseline expectation for the first Fed cut from December to September,” wrote BofA’s U.S. economics team in a Friday note seen by Fortune, adding it had “locked in” the cut.

“Overall, the labor market is cooling, but without a sharp slowdown,” said analysts Michael Gapen, Aditya Bhave, Stephen Juneau, Shruti Mishra, and Jeseo Park.

The economists point out that Hurricane Beryl in Texas meant 436,000 nonagricultural workers said they were employed but unable to work because of bad weather. 

“The increase in the number of unemployed this month is due to job losers on temporary layoff versus other job losers,” the group wrote. “Hence, we don’t think 114k payrolls is the new trend. The three-month moving average is closer to 175k which is more likely where the trend is.”

While the jobs report, in Bank of America’s opinion, isn’t as big a blow as it may initially appear the institution still expects the Fed to cut by 25bps in September.

The cuts will continue until rates hit the range of 3.25-3.5%, the analysts said: “If the economy is cooling faster than we or the Fed anticipated, then it would point to a lower need for a higher-for-longer policy stance.”

Likewise UBS is calling for an acceleration in cuts.

In a note seen by Fortune published Friday the bank’s senior U.S. economist, Brian Rose, wrote: “With the unemployment rate above and core PCE inflation now below the Fed’s year-end forecasts, we believe that the balance of risks favors more aggressive action by the Fed.

“We are changing our base case to rate cuts of 50 basis points in September and 25 basis points each in November and December, for a total of 100 basis points by year-end.”

With analysts further firming up their stance for a cut, Wells Fargo has warned if Powell doesn’t make his move then Wall Street will react abruptly.

Mike Pugliese, senior economist at Wells Fargo, told Fortune even prior to the jobs report: “Based on what we know now, no rate cut in September would come as a major surprise to us and to financial markets. Financial conditions likely would tighten if the FOMC adopted an unexpectedly hawkish stance over the next seven weeks.”

Sahm signals recession

July’s jobs report also ticked over a metric which economists have been nervously watching for months.

The Sahm Rule in the past has been fairly accurate in signalling when the U.S. is about to head into a recession.

The metric looks at two factors: the current three-month moving average of U.S. unemployment and the lowest three-month moving average of U.S. unemployment over the past year. If the current average is higher than the lowest average by more than half a percentage point, the American economy is headed for a recession.

Up until last month, the index had been below 0.5%. However, in July it ticked up to 0.53%.

That said, the creator of the rule itself, Claudia Sahm, said “no one should be in panic mode.”

“This time really could be different,” she told Fortune last week. “[The Sahm Rule] may not tell us what it’s told us in the past, because of these swings from labor shortages, with people dropping out of the labor force, to now having immigrants coming lately.”

Market upset

But not everyone received the “don’t panic” memo.

While a range of factors has contributed to the global sell-off in equities (oil prices, geopolitical tensions, discrepancies between foreign exchange rates making deals less lucrative), concerns about the U.S. economy entering a recession have not helped.

Ahead of the FOMC meeting at the end of July, former president of the Federal Reserve Bank of New York Bill Dudley said the Fed need to cut rates as soon as possible.

Now names like Tesla CEO Elon Musk and Pershing Square founder Bill Ackman are asking the same question.

“The Fed needs to drop rates,” Musk wrote on social media platform X yesterday. “They have been foolish not to have done so already.”

Likewise Ackman—who has been pushing for cuts since late last year—wrote early on Monday: “The Federal Reserve was too slow to raise rates. Now it is too slow to lower them.”

The Federal Reserve was too slow to raise rates. Now it is too slow to lower them.

— Bill Ackman (@BillAckman) August 5, 2024

Recommended Newsletter: CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about–and from inside–the C-suite. Subscribe Now.

Contents
Sahm signals recessionMarket upset

#Powell #faces #market #mutiny #doesnt #September #rate #cutWall #Street #locked #timings #unemployment #concerns

TAGGED:ConcernscutWallDoesntEconomyfacesfed interest rateinflationJerome PowelllockedmarketmutinyPowellrateSeptemberstreettimingsunemploymentWall Street
Share This Article
Facebook Twitter Pinterest Whatsapp Whatsapp LinkedIn Email Copy Link Print
Share
What do you think?
Love0
Sad0
Happy0
Sleepy0
Angry0
Dead0
Wink0
Previous Article Leaving streetlights on all night appears to be changing how nature works, study finds | Science & Tech News Leaving streetlights on all night appears to be changing how nature works, study finds | Science & Tech News
Next Article Bangladesh PM Sheikh Hasina flees country after deadly protests, ending 15-year rule Bangladesh PM Sheikh Hasina flees country after deadly protests, ending 15-year rule
- Advertisement -

Latest Post

BTC, ETH, XRP, BNB, SOL, DOGE, ADA, SUI, LINK, AVAX
BTC, ETH, XRP, BNB, SOL, DOGE, ADA, SUI, LINK, AVAX
Cryptocurrency
Guide to Pope Leo XIV’s inauguration
Guide to Pope Leo XIV’s inauguration
World News
Altcoins are on the verge of ‘most powerful rally’ since 2017 — Analyst
Altcoins are on the verge of ‘most powerful rally’ since 2017 — Analyst
Cryptocurrency
‘He’s the chosen one’: Meet the 14-year-old British boxer now fighting for Bahrain | World News
‘He’s the chosen one’: Meet the 14-year-old British boxer now fighting for Bahrain | World News
World News
Tokenization makes investing more accessible — Robinhood exec
Tokenization makes investing more accessible — Robinhood exec
Cryptocurrency
Trump’s Gulf Tour: The Money Deals, the Diplomacy and What Comes Next
Trump’s Gulf Tour: The Money Deals, the Diplomacy and What Comes Next
World News
- Advertisement -

You Might Also Like

Chair of Indian regulator invested in funds linked to Adani, alleges Hindenburg Research
Business

Chair of Indian regulator invested in funds linked to Adani, alleges Hindenburg Research

August 11, 2024
Roblox lifts bookings forecast as mature content draws more paying gamers
Business

Roblox lifts bookings forecast as mature content draws more paying gamers

August 1, 2024
Exclusive-Apple faces ‘strong action’ if App Store changes fall short, EU’s Breton says
Business

Exclusive-Apple faces ‘strong action’ if App Store changes fall short, EU’s Breton says

January 28, 2024
HBAR, OP, INJ and RUNE flash bull signals as Bitcoin price looks for stability By Cointelegraph
Business

HBAR, OP, INJ and RUNE flash bull signals as Bitcoin price looks for stability By Cointelegraph

August 21, 2023

About Us

NEWS JUNCTION (NewsJunction.xyz) Your trusted destination for global news. Stay informed with our timely and accurate reporting on diverse topics, including politics, technology, science, entertainment, sports, and more. Count on us for unbiased and reliable updates at your fingertips.

Quick Link

  • About
  • Disclaimer
  • Privacy Policy
  • Terms of Use
  • Contact

Top Categories

  • World News
  • Business
  • Technology
  • Entertainment
  • Cryptocurrency
  • Sports News
  • Trend
  • People

Subscribe

Subscribe to our newsletter to get our newest articles instantly!

    © 2023 News Junction.
    • Blog
    • Advertise
    • Contact
    Welcome Back!

    Sign in to your account

    Username or Email Address
    Password

    Lost your password?