The July jobs report came in weaker than expected, putting downward pressure on treasury yields in Friday’s trading session. With the labor market showing signs of significant cooling, questions arise about the Federal Reserve’s decision to hold rates higher for longer. Kelsey Berro, JP Morgan asset management portfolio manager for global fixed income joins Morning Brief to discuss these implications.
Berro notes that the jobs report revealed weakness in "higher income categories," with job losses in the tech sector, professional business services, and information businesses. Meanwhile, job growth was led by education, healthcare, and government sectors. Regarding the Fed’s next move, she believes this report "does solidify a September rate cut," but cautions that this "is just one data point."
"We are still gonna need more information," she told Yahoo Finance, adding, "the market on the other hand they’re gonna run with this."
Berro observes that while this report didn’t change the market’s expectation for a rate cut, it did raise questions about the timing and frequency of future cuts. "If the labor market is actually weakening more materially, and that’s really the circuit breaker, Powell said that in his press conference — then we could be looking at a pace that’s more like once a meeting," she explained to Yahoo Finance.
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