What is the Federal Reserve’s Main Driver Before the Monetary Policy Committee Meeting?

The August employment report, due on Friday, will be the main focus in a week
that includes a short holiday as markets prepare for the Federal Reserve to begin lowering interest rates later this month.
Meanwhile, the Bank of Canada is set for another rate cut, oil prices are likely to remain under pressure,
and China is expected to release more manufacturing data.
Here’s a look at what’s happening in the markets for the coming week.

Content:

Employment Data
Market Volatility
Bank of Canada
Oil Prices

Employment Data

Non-Farm Payrolls Data

As the Federal Reserve prepares to cut interest rates for the first time in years, investors will focus their attention on Friday’s jobs report to gauge the strength of the central bank’s move. Federal Reserve Chairman Jerome Powell has indicated that the time has come to begin cutting rates, with many in the markets expecting the process to start with a 25 basis point cut at the September 17-18 meeting. Any signs of labor market weakness could reignite fears of a potential economic recession, which rattled markets in late July and early August. The impact of the yen carry trade has exacerbated the sell-off.

Before Friday’s report, there are other updates on the health of the labor market, starting with the JOLTS report on job openings on Wednesday, which also contains data on layoffs. The private sector jobs report is due on Thursday, along with the weekly report on initial jobless claims.

Market Volatility

Wall Street stocks rose, with the Dow Jones Industrial Average hitting its second-highest closing level ever on Friday on the back of hopes for an imminent rate cut by the Federal Reserve. Markets have rebounded since the early August sell-off, with the signs of a broader rally seen as encouraging for investors worried about the concentration in tech stocks. Investors are also putting money into lesser-known value stocks and small-cap stocks, which are expected to benefit from lower interest rates. However, historically, September and October can be volatile months for stocks, according to analysts at Bank of America, but any surprises from economic data could cause fresh market shocks.

Bank of Canada

Bank of Canada Cuts Interest Rates Again

The Bank of Canada is widely expected to make a third consecutive rate cut when it meets on Wednesday.
The bank has already lowered its benchmark interest rate twice since June, bringing it down to 4.5%,
and markets are currently expecting two more rate cuts this year after September.
Data released on Friday showed that the Canadian economy grew at a slightly faster-than-expected rate in the second quarter,
but in a sign of impending weakness, growth was flat in June,
and preliminary estimates from Starscan showed there would also be no growth in July.
Bank of Canada Governor Tiff Macklem hinted after the bank’s July meeting at shifting the bank’s focus toward boosting the economy rather than fighting inflation.

Oil Prices

Oil Prices Under Pressure

It prices ended the week lower on Friday, posting significant monthly losses as the outlook for increased supply from OPEC
and its allies starting in October weighed on the market.
Brent crude futures for October delivery, which expired on Friday, settled down $1.14 at $78.80 a barrel,
marking a 0.3% weekly decline and a 2.4% drop for the month.
U.S. West Texas Intermediate crude futures settled down $2.36 at $73.55, down 1.7% for the week and 3.6% in August.
Reuters reported on Friday that OPEC+ was sticking to its plans to increase output starting next month,
as export disruptions from Libya and pledged cuts by some members to offset excess production balance the impact of slowing demand.
Uncertainty about the expected rate cuts from the Federal Reserve also weighed on prices,
as strong consumer spending data on Friday countered the pace of monetary easing.
Lower interest rates could boost economic growth and demand for oil.

What is the Federal Reserve’s Main Driver Before the Monetary Policy Committee Meeting?

What is the Federal Reserve&#8217;s Main Driver Before the Monetary Policy Committee Meeting?

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What is the Federal Reserve’s Main Driver Before the Monetary Policy Committee Meeting?