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Today's Read

Good Monday Morning! Thanks for starting your week with us!

In this edition we are covering a strong jobs report, its impact on interest rates and the stock market, more tensions in the Middle East, another Hurricane developing in the Gulf.

US job growth topped all estimates in a report released Friday. The unemployment rate unexpectedly declined and wage growth accelerated, all but taking the odds out that the Federal Reserve will do another 50 basis point interest rate cut at their next meeting on November 7. Non-farm payrolls increased by 254,000 in September, the most in six months. Economists had predicted a much smaller increase of 150k.
An upward revision from the previous two months showed an additional 72,000. The unemployment rate fell to 4.1% and hourly earnings increased 4% from a year earlier, according to the Bureau of Labor Statistics.

Fed Chair Jerome Powell had reaffirmed earlier that concerns about the labor market were part of the reason why the Fed decided to start their easing cycle with a large 50 basis point cut in September. This strong jobs report should help ease those concerns and keep them from doing another larger cut. Bottom line, a 25 basis point cut is baked in for their next meeting.

Meanwhile, the US Treasury market immediately reversed its course that the Fed was on a more aggressive easing pace after the jobs release and interest rates shot up over 20 basis points in the front end of the curve. The 2yr ended at 3.92%, The 5yr ended at 3.80%.

The next test will be the consumer price data out Thursday.

Stocks ended Friday very close to session highs on the stronger-than-expected jobs report, which underscores the resilience of the US economy and hopes that a soft landing could be achieved. The S&P rose nearly 1.0%, while the NASDAQ rose 1.22%. Those two indices are up over 20% for the year. The Dow Jones rose 341 points on the news.

The US Central Command said on Friday that it struck Houthi targets in Yemen, including Houthi offensive military capabilities, to secure international waterways. The Red Sea is a key trade route between Asia, Europe and the Middle East. The US strikes were taken to prevent attacks on commercial vessels by the Houthi rebels. Tensions have risen in the Middle East following Israel’s killing of Hezbollah leader Hassan Nasrallah last Friday.

Less than 10 days after Hurricane Helene made landfall and left a wake of death and destruction, the Gulf of Mexico is bracing for another storm. Tropical storm Milton is forecast to strengthen and bring potential life-threatening impacts to the west coast of Florida on Wednesday as a Category 3 storm. For a hurricane to become a Category 3, winds at its center must be sustained at 111 mph.

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2. Set Up an Auto-PMT or Payroll Deposit of at Least $10.00 a Month

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Today's Read

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Good morning! Thanks for starting your week with us! It’s Tuesday already! We hope you had an enjoyable holiday weekend!!

Economic data out this week: Retail Sales (Sept), Weekly Jobless Claims, Housing Starts/Building Permits. The most interesting to note will be Jobless Claims, which will likely be elevated due to Hurricane Milton and also the continuing Boeing Co. strike in the state of Washington. Milton was the second major hurricane to hit Florida recently, coming just two weeks after Helene. More than 5.5 million people were urged to leave Florida’s western coast, which was one of the largest such evacuations on record. The rise in claims would also suggest that the October payrolls report could be largely affected.

Fed Governor Chris Waller said the economy is “much stronger than previously thought” and the labor market remains quite healthy.” He made his remarks at an event at Stanford University. Waller noted that the Fed and Wall Street had been fooled by reports over the summer that indicated the economy was slowing; however, new and revised economic information is “signaling that the economy may not be slowing as much as desired,” Waller said. He also hinted that he would prefer smaller rate cuts than the larger half-point reduction the Fed made in September, which was the first rate cut in four years.

US equity futures are pointing to a steady open for Wall Street this morning as earnings from many American banks are to report earnings. Also reporting this week, Nvidia Corp. and Advanced Micro Devices Inc., after Bloomberg reported the Biden administration discussed capping sales of advanced AI chips to some countries.