US Fed could cut 50bps after latest job numbers
The latest US non-farm payrolls number came in worse than expected. A mere 142k jobs were created in August, below the median consensus of 160k, although above estimates of 120k. However, the unemployment rate remained steady at 4.2%.
Making matters worse, both June and July’s numbers were also revised downwards. June saw its numbers decrease to 118k from 179k, while July’s fell to 89k from 114k. Meanwhile, average hourly earnings on a year-on-year basis also came in above consensus of 3.7%, at 3.8%, leaving the Federal Reserve in a tight spot as higher wage growth could leave inflation stickier than expected.
Even so, the odds of a 50bps rate cut has now jumped to 47% from 43% yesterday. Equity and bond markets have had a rather mixed reaction, however. The S&P opens roughtly flat at 0.2%, while the 10Y yield has remained unmoved at 3.73%. Both GBP/USD and gold have also returned to their pre-jobs report levels of $1.3181 and $2,540, respetively, having spiked earlier.
Newspage asked economists, analysts, and experts for the views on the potential of a US recession, what this means for gold, and what it could spell for the US dollar.