Bloomberg writes August’s market performance is the worst August since 2015. The Newswire also reports the S & P 500 is hovering nominally lower than it was at this point in 2021. A lot has changed over the last two years.
Seasonally, September is the worst month for the S & P 500. Tomorrow and Friday two major data points are released that could set the tone until perhaps the FOMC meeting in about three weeks.
The Fed has adamantly stated the data will dictate its actions. Tomorrow the Personal Consumption Expenditures Index, or the Federal Reserve’s preferred measure of inflation, is released. Friday the BLS employment report is announced.
Both data points can potentially offer evidence as to the strength of the economy and inflationary pressures. Labor is the largest cost of production.
Speaking of labor, job openings fell in July by more than expected to a more than a two-year low, offering fresh evidence that labor demand is cooling.
The Bureau of Labor Statistic’ s Job Openings and Labor Turnover Survey (JOLTS) marked its sixth decline in the last seven months.
The so-called quits rate, which measures voluntary job leavers as a share of total employment, dropped to 2.3%, the lowest since the start of 2021. This implies workers are less confident in their ability to find another job in the current market.
Fewer vacancies paired with increased labor force participation have allowed for greater balance in the labor market and helped temper wage growth.
Also released yesterday is a consumer confidence survey. The Conference Board’s Index fell by the most in two years as souring views of the labor market, [read JOLTS report], higher borrowing costs and lingering inflation curbed optimism.
The reading was below all estimates and the decline reversed most of the advance over the previous two months.
A gauge of expected inflation a year ahead rose to 5.8%, the first uptick in five months, suggesting consumers are once again preoccupied with rising prices in general, particularly groceries and gas.
All markets advanced from the data as it bolstered speculation the Federal Reserve will be able to pause its interest rate hikes in September. The inflationary implications of the report were ignored.
What will happen today? Revised second quarter GDP is released. How will the statistics—specifically the pricing data—be interpreted?
Last night the foreign markets were down. London was up 0.33%, Paris down 0.36% and Frankfurt down 0.35%. China was up 0.04%, Japan up 0.33% and Hang Seng down 0.01%.
Futures are flat ahead of the upcoming data deluge. The 10-year is off 8/32 to yield 4.16%.
