Unemployment could spark 50bps cut and 'panic move' by Fed



ISM’s Services PMI (Purchasing Managers’ Index) saw the sector grow in August, according to a print of 51.5 which was above expectations for 51.4. “We’re putting every data point under a microscope,” Freedom Capital Markets chief global strategist Jay Woods tells Madison Mills and Brad Smith on Catalysts, emphasizing the importance of economic data leading into the Federal Reserve’s September policy meeting in two weeks.
The US Bureau of Labor Statistics will release August jobs data tomorrow morning, which is projected to be a major influence in how the Fed cuts finance charge rates in the remaining months of 2024.
“Friday is the biggest unemployment report we’ve had since the last one, obviously, which came two days after the Fed meeting. And what we learned after that meeting was: One, the Fed didn’t really know the data because it came in hot. We were expecting 4.1%, we got 4.3%,” Woods says. “Tomorrow, 4.2%. Anything hotter than that? Then this industry could take that leg lower and then we could be talking about 50 basis points and a possible panic move by the Fed.”
Woods weighs in on the deluge of industry events in recent weeks, from the Japanese yen carry trade to spiking volatility (^VIX), that have been bearing down on equities (^DJI, ^IXIC, ^GSPC).
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