The Federal Reserve’s Dual Mandate: A Shift in Focus?
As the central bank becomes more confident in its inflation targets, it’s turning its attention to the labor market, a crucial aspect of its dual mandate. Today’s highly anticipated nonfarm payrolls report from the Labor Department is expected to show a continued easing of the job market.
Job creation has slowed in recent months, and the unemployment rate, although still historically low, has begun to rise. Federal Reserve Chair Jerome Powell has expressed concerns about further cooling in labor market conditions, indicating that jobs are becoming a growing concern.
This week, two key data points hinted at a mixed labor market. Job openings unexpectedly surged in August, while private nonfarm payrolls showed unexpected strength in September. Today’s report is expected to show 132,500 jobs added in September, down from 142,000 in August. However, some experts believe the actual number could be higher, potentially closer to 200,000.
The markets may be in for a surprise, warns Michael Kramer, manager of Mott Capital. While continuing jobless claims have remained stable, the market may be underestimating the labor market’s vulnerability to an upside surprise in the unemployment rate.
In other news, a port strike has ended with a tentative deal featuring a 62% wage hike, while Spirit Airlines is in talks with creditors for a potential bankruptcy filing. Tesla’s information chief has exited ahead of a robotaxi event, and Duke Energy has delayed shutting down its largest coal-fired plant.
OpenAI has disclosed a new $4 billion credit facility with a bank consortium, and Senator Warren is seeking growth limits on Citigroup in a letter to the OCC. GOP senators are probing the New York Fed on Iraq bank flows to Iran, while Lilly has ended its GLP-1 shortage, causing Hims & Hers’ stock to slide.
AbbVie has cut its earnings forecast due to R&D expenses, and risk is on for Wall Street as traders pour money into ETFs. In global markets, Japan’s Nikkei is up 0.2%, while Hong Kong’s Hang Seng has surged 2.8%. India’s Sensex is down 1%, and European markets are mixed.
Futures indicate a flat Dow, a 0.2% gain for the S&P, and a 0.4% rise for the Nasdaq. Crude oil is up 1.3% to $74.64, while gold remains flat at $2,679.40. Bitcoin has gained 1% to $61,302, and the 10-year Treasury yield has risen 1 basis point to 3.86%.
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