Closing post
Time to wrap up…after a surprisingly strong US jobs report reignited speculation that US interest rates will be raised even higher to cool the economy, despite risks of a recession.
Here’s today’s main stories:
The US Federal Reserve will be “agonising” about how high it should push US interest rates, says Charles Hepworth, Investment Director at GAM Investments:
Hepworth says:
“The US jobs report for September smashed all expectations with 336,000 new additions to the workforce, compared to a forecast of a much more modest addition of 171,000 jobs.
This hot jobs report saw strong gains in the service sector, with hospitality recording big increases in new hires. This augers well for the sector as obviously increased hiring reflects buoyant demand. However, it would be remiss to ignore that some of this re-hiring is just normalisation back to levels pre-pandemic. It certainly isn’t reflective of an economy that is slowing perhaps as quickly as the Federal Reserve hopes for.
Even if wage growth increased less than expected, the odds of a further hike from current levels has to be higher than it was prior to this report (and it was high already). Bond bears are still in full control with yields across the Treasury curve pushing to near term highs and this is reflecting in a level of angst for equity markets which remain under pressure with the higher for longer narrative now having to be finally accepted.
The Fed must also be agonising of how much it needs to continue to do before the economy succumbs to higher and higher rates.”
