Latest / Markets with Megan: A Quick Financial Markets Update / 162,000 Jobs Added: What It Means for the Fed | S3 E165 | 09-04-26

Transcript

162,000 Jobs Added: What It Means for the Fed | S3 E165 | 09-04-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: That was a much better than expected jobs report that we got this morning.
• 0:04
  Megan Horneman: It is Friday, September the 4th, and this is Markets with Megan.
• 0:07
  Megan Horneman: If you like this podcast, you can subscribe to it, hit the alarm bell, share with your friends, your family, your colleagues, anybody who's interested in that headline data that you read, what it means for the economy and what it means for investments.
• 0:21
  Megan Horneman: Well, this morning we received the very much anticipated August Jobs Report.
• 0:25
  Megan Horneman: This is the last jobs report the Fed will get before they meet in a couple weeks to make a decision on interest rate policy.
• 0:31
  Megan Horneman: And what we saw was that the US economy created 162,000 jobs, which was much better than anticipated.
• 0:39
  Megan Horneman: We were only expected to create to see a 55,000 increase in job creation, but it came in at 162,000.
• 0:48
  Megan Horneman: And when you look at the two-month net revisions, they were up by 55,000.
• 0:53
  Megan Horneman: So again, very strong data here on a monthly basis.
• 0:57
  Megan Horneman: Where this job creation was created was in the private goods producing construction.
• 1:02
  Megan Horneman: We know that with the increase in spending and hiring in the AI production side.
• 1:16
  Megan Horneman: And then government jobs actually also increased for the month.
• 1:20
  Megan Horneman: But let's look at some of the other data points that we get out of this report.
• 1:25
  Megan Horneman: First of all, average hourly earnings, they grew three tenths of a percent for the month, which was much better than the prior month, which was only up two tenths.
• 1:34
  Megan Horneman: But we're still seeing wages only up about 3.1% on a year-over-year basis.
• 1:38
  Megan Horneman: Now, when you look at the unemployment rate, it remained unchanged because we saw the labor force participation increase as well as the amount of jobs increase.
• 1:49
  Megan Horneman: The labor force participation raised it increased by 569,000 people.
• 1:54
  Megan Horneman: So that kept that unemployment rate relatively low here, that 4.1%.
• 1:59
  Megan Horneman: We also saw from the underemployment rate, so those that would like to work full-time but can't because of maybe economic reasons, but that declined now from 7.9% to 7.7%.
• 2:11
  Megan Horneman: So that's good news.
• 2:13
  Megan Horneman: This is a good report, and there's very little that you can say is negative about this report.
• 2:18
  Megan Horneman: You might read that some people say they don't believe it.
• 2:21
  Megan Horneman: Look, we can only read what we get and what we see.
• 2:24
  Megan Horneman: And what we see is a very good report here.
• 2:27
  Megan Horneman: So what has happened in the market today is equities are weaker because now the market is pricing in an above 50% chance that the Fed will raise interest rates at the September meeting.
• 2:38
  Megan Horneman: It's a 62% chance at this point.
• 2:40
  Megan Horneman: We're seeing the yield curve flatten a bit, where the short-term interest rates are moving higher because they will move higher when expectations for short-term rates to rise in September move higher.
• 2:52
  Megan Horneman: So they have increased.
• 2:53
  Megan Horneman: Long-term rates have declined a little bit, not by much.
• 2:57
  Megan Horneman: And this has to do with what we've talked about.
• 2:59
  Megan Horneman: The Fed needs to get a hold of that long-term part of the curve.
• 3:03
  Megan Horneman: And if the expectation is the Fed's going now to come in and cut and raise interest rates, that may help ultimately with this inflation story that we've struggled with for five plus years now.
• 3:14
  Megan Horneman: This is why we're seeing that reaction in the treasury market.
• 3:18
  Megan Horneman: We um will get some more information.
• 3:20
  Megan Horneman: There still isn't some more inflation information before the Fed meets, but our opinion at this point is the Fed should be raising rates.
• 3:27
  Megan Horneman: They probably should have been raising them already, and they're likely to raise rates in September after this report.
• 3:32
  Megan Horneman: That's all we have today.
• 3:33
  Megan Horneman: If you want a history of our podcast, you can go to marketswithmegan.fm.
• 3:37
  Megan Horneman: Thank you.