Breaking News: U.S. Employment Report Sparks Recession Fears, Wall Street in Panic Mode
The latest U.S. employment report for June has sent shockwaves through Wall Street, with major firms now predicting aggressive interest rate cuts by the Federal Reserve. Employers added just 114,000 jobs in July, causing the unemployment rate to rise unexpectedly to 4.3%. This has led to speculation that the Fed will deliver a half-percentage-point rate cut at its upcoming meeting in September, a significant change from previous forecasts.
Market reaction was swift, with the three main U.S. stock indexes tumbling over 2% and investors flocking to safe-haven Treasuries, pushing yields lower.
New Forecasts:
- BOFA GLOBAL RESEARCH: Expects Fed to start cutting rates in September by 25 basis points, with further cuts expected in December.
- JP MORGAN: Predicts rate cuts of 50 bps at both September and November meetings, followed by 25 bps cuts at every meeting thereafter.
- GOLDMAN SACHS: Anticipates three consecutive 25 bps cuts in September, November, and December.
- CITI: Forecasts 125 bps in Fed cuts this year, with 50 bps cuts each in September and December.
- TD SECURITIES: Sees 75 bps easing in 2024, with 25 bp cuts each in September, November, December.
- BARCLAYS: Expects the FOMC to cut rates by 25bp three times this year, in September, November, and December, and three times in 2025.
Analysis:
The weak U.S. employment report has raised concerns about a possible recession, leading to expectations of aggressive interest rate cuts by the Federal Reserve. This can impact various financial markets, including stocks and bonds, as investors adjust their portfolios to account for potential changes in monetary policy. It is important for individuals to stay informed about these developments and consider how they may affect their personal finances and investment decisions.
