Jobs Report Stokes Bets on Sept. Fed Rate Hike

Summary

The video covers the August jobs report and its implications for Federal Reserve policy. Michael McKee says the strong report removes any chance the Fed would cut rates because the economy is strengthening, but subdued average hourly earnings still allow for holding steady. The next key catalyst is the August CPI report, with services inflation and the ISM services inflation measure keeping hawkish pressure on the Fed.

• August jobs report was strong, prompting traders to price higher odds of a September Fed rate hike.
• Michael McKee notes the report removes rate-cut chances but does not necessarily rule out holding steady.
• Average hourly earnings show no year-over-year wage pressure, supporting a hold argument.
• Chris Waller had made the case that the economy does not need higher rates without wage pressure.
• The upcoming CPI report is now the key event, especially for services inflation.
• The ISM services report showed an increase in its inflation measure, keeping hawkish concerns alive.