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Could Markets Cool After U.S. Loses 33,000 Jobs and the Fed Still Moving Forward?

October 6, 2017
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In what can only be described as a shocking jobs report, Reuters reports that:

…nonfarm payrolls fell by 33,000 in September as Hurricanes Harvey and Irma left displaced workers temporarily unemployed and delayed hiring.

This marks the first time that “US payrolls contracted since 2010,” according to Business Insider. They go on to say that despite the poor numbers, investors were more surprised by hourly wage data.

The Federal Reserve took this as sign that their plans have been correct. Business Insider writes:

Digging deeper, the spike in hourly wages can be read as a signal inflation is picking up, which may embolden the Federal Reserve to continue its monetary tightening process — something that’s historically been viewed as a negative for stocks because how attractive higher rates would make bonds by comparison.

The question now becomes what will happen in the coming weeks as a result of these reports? While the lost jobs will likely recover after the hurricane damage has been repaired, the Fed’s plan to raise the rates may douse the red hot markets. The bond market itself has been called into question after President Trump proved that he could devalue the markets with a word, (read Could Puerto Rican Debt Comments Wreck the Entire Bond Market? – Smart Money Press) so do the new rates actually give investors anymore certainty or comfort in the bond market?

Investors will have to see if these reports alter the Fed’s plans in some way as the economy recovers from these major disasters. Do not forget that relief efforts for Puerto Rico are still under way as are negotiations over tax reform, so there is still much to consider before the markets stabilises any further.

To read Business Insider’s piece on the September jobs report, click here.

To read Reuters’ article on Wall Street this morning, click here.

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