- Job openings in the US rose to 11.239 million in July.
- US Consumer confidence increases in August.
- Investors are expecting a 75bps rate hike from the FED in September.
Following yesterday’s hold of support, E-mini Nasdaq-100 (NQ) futures opened the day in a positive frame of mind following Powell’s address at Jackson Hole last Friday. Positive US economic data is worrying investors. As the Central Bank focuses on the demand side of the economy, favorable economic conditions are considered a sign that the FED will stick with its aggressive tightening cycle.
US consumer confidence went up in August, and job postings increased to 11.239 million in July. The labor demand does not appear to be slowing.
The above chart shows there are twice as many jobs as available workers. The openings-to-unemployed ratio is nearly at 2:1 and may plague Fed officials as they try to cool rising inflation.
“They have to weaken the labor market, and how are they going to do that – they are going to jam rates and make things so expensive that people will pull back. Demand is going to fall off, and people are going to get laid off,” said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.
The information puts a greater emphasis on the August non-farm payrolls data that is due on Friday.
John Williams, the president of the New York Fed, stated on Tuesday that the Fed would probably need to raise its policy rate to around 3.5% and is unlikely to cut rates in the coming year as it battles inflation.
At the Fed’s September meeting, traders are factoring in a 74.5% chance of a third consecutive rate hike of 75 basis points.
Not only did the FED emphasize the necessity for additional rate increases during the Jackson Hole Economic Symposium, but ECB members also hinted at the likelihood of strong tightening to control inflation at their meeting on September 8.
Growth stocks fell per predictions of rising interest rates. The E-mini Nasdaq-100 futures closed down yesterday. The announcement of reduced year-over-year sales by the Chinese technology company Baidu aided the movement.
Investors will likely remain cautious as they await the nonfarm payrolls report this Friday. This will give more clues on how the economy is doing and what the Fed might do in the future.