Your Capital Markets Snapshot: Labor Market Weakens, Rate Cuts in Focus

Last week was a loaded week for US labor market data, and it contained clear signs of a softening U.S. labor market. August jobs data showed only 22,000 jobs were added, well below expectations, and the unemployment rate rose to 4.3%. This weaker labor data increased expectations for Federal Reserve rate cuts, with markets expectations for a rate cut of either 25 or 50 basis points at the September meeting. Eyes will be on this week’s CPI and PPI releases, which will provide the last read on inflation going into the September meeting. Treasury yields fell sharply, supporting consumer and corporate borrowing, while the yield curve steepened, benefiting lenders. Equity markets were volatile to end the week, with the S&P 500 hitting an all-time high before pulling back following Friday’s nonfarm report. Despite the volatility, the S&P 500 and Nasdaq managed to post slightly positive weeks while the Dow Jones slipped slightly. Gold rallied to a record high, and mortgage rates saw their largest one-day drop in over a year.