[뉴욕인사이트] September is likely to see a rate cut… August employment figures to watch

All three major indices rise in August
It plunged early in the month on concerns of a recession, then rebounded.
Unemployment rate and other data to be announced ahead of September FOMC

▲Traders work at the New York Stock Exchange (NYSE) on July 12 last year. New York (USA)/Reuters Yonhap News

This week (2nd to 6th), the New York Stock Exchange is expected to focus on the August employment figures that will be released one after another.

Last month, the three major indexes rose. The Dow rose 1.8% over the month, while the S&P 500 and Nasdaq rose 2.3% and 0.7%, respectively. The S&P 500 recorded its fourth consecutive month of gains. It plunged at the beginning of the month due to recession concerns, but it has since rebounded.

“The stock market is acting as if everything is optimistic,” Michael Green, chief investment strategist at Simplify Asset Management, told CNBC. “There is more evidence for a soft landing.”

This month, the US Federal Reserve (Fed) Base rate As the regular meeting of the Federal Open Market Committee (FOMC) is held, where a rate cut is likely, investors are also paying keen attention. Initially, there were forecasts that the interest rate would be cut by 0.5 percentage points (p), but as expectations for a soft economic landing grow again, even a 0.25 percentage point cut is gaining ground.

Investors are likely to pay attention to employment data released this week to gauge the extent of the cut. Among them, the August nonfarm payrolls report is expected to be a criterion for investors. In this report, the U.S. Department of Labor reports new employment and the unemployment rate.

Earlier, in July, new employment was 114,000 and the unemployment rate was 4.3%. Employment was far below market expectations and the unemployment rate hit a new high in nearly three years. This once raised concerns about a recession due to a worsening labor market.

However, Sam Coffin, an economist at Morgan Stanley, wrote in a letter to clients last week that “the primary reason the unemployment rate hit 4.3% in July was an unusually large increase in temporary layoffs,” and that “as the Texas labor market shock from the hurricane subsides, we do not expect a repeat of this.”

He then predicted that “new employment will be 185,000 and the unemployment rate will be 4.2%,” and that “the Fed will cut rates by 0.25%p in September.”

Bloomberg News also combined the forecasts of major economists and forecast that new employment would increase by 163,000 in August and the unemployment rate would fall to 4.2%.

Other major events include: Labor Day holiday on the 2nd; S&P Global Manufacturing Purchasing Managers’ Index (PMI) for August, ISM Manufacturing PMI for August, July Construction Spending, and September Economic Optimism Index on the 3rd; Trade balance for July, Factory Orders for July, JOLTs (Jobs Openings and Turnover Report), Fed Beige Book, and Canada’s benchmark interest rate decision on the 4th; ADP Employment Report for August, Weekly New Claimants for Unemployment Insurance, Q2 Productivity and Unit Labor Costs, S&P Global Services PMI, ISM Non-Manufacturing PMI on the 6th; Non-farm payrolls employment and unemployment rate on the 7th, and a speech by the President of the Federal Reserve Bank of New York.