My Thoughts on August Employment

I see this as another rather weak monthly economic report. The fact that job creation was stronger in the Household Survey than in the Establishment Survey makes this report stronger than it would otherwise be. Still, full-time employment is still ebbing and having a strong educational background appears to no longer be the tailwind in kicking off a career that it has historically been.

This may or may put the size of the already penciled in (by the markets) September 18th FOMC rate in some jeopardy. While it's clear that the market has become like a junkie, begging for its next fix, I have not seen much movement in Fed Funds futures trading this morning. The US Dollar Index has actually strengthened since this release, and US Treasury yields have gyrated.

Those futures markets though? Right now, they are pricing in a 61% probability for a 25-basis point rate cut and a 39% likelihood for a 50-basis point rate cut. That said, the path towards easier money looks more aggressive down the road. There is now an 88% likelihood for 100-basis points worth of rate cuts by the end of this year and a 67% probability for 200-basis points worth of rate cuts by May 2025. I hate to say it, but this market is starting to price in an economic calamity. Let's hope for you and I and our children, that this is not the case.

Don't forget... August CPI this coming Wednesday. Always Faithful.