August Jobs Report Favors a Fed Rate Hike, Sahm Says

Summary

Claudia Sahm reacts to the August US employment report, arguing that strong payrolls reduce labor-market downside risks and tilt the Fed debate toward officials who want to hike rates. She says the market is pricing the report correctly and that a solid jobs market lets the Fed focus on inflation. The discussion highlights front-end rate pressure, with the two-year yield noted higher around 4.41%.

• Sahm says Fed messaging has focused on inflation rather than the labor market.
• August payrolls show strength, reducing labor-market downside risks for Fed policy.
• She says the report favors Fed officials who want to start hiking rates.
• Sahm believes the market is pricing the jobs report correctly.
• A solid labor market may allow the Fed to focus on bringing inflation down.
• The two-year Treasury yield was noted higher at 4.41%.
• She describes the upcoming Fed decision as a tough call but leaning toward the hiking camp.