Fed 'likely' to cut rates before regular September meeting: Jefferies
The long-anticipated moment of a significant shift in the US labor market has arrived, signaling a potential Federal Reserve rate cut before the regular September meeting, Jefferies analysts said in a note to clients on Monday.
The labor market report for July showed a mere 114,000 increase in nonfarm payrolls, the second-lowest since December 2020. Jefferies said the household survey also indicated a weakening trend, with total employment rising by just 67,000 month-over-month in July and up only 57,000 year-over-year, the lowest rate of growth since August 2010. The unemployment rate has climbed to 4.3%, the highest level since October 2021.
The firm states that money markets are now discounting 116 basis points of easing by year-end, a sharp increase from the 86 basis points anticipated before the payroll data release.While interest rate cuts may not be immediately positive for US equities, Jefferies believes they will benefit Asian and emerging market stocks.
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