US Job Creation Slows, Fed Rate Cut Now Appears Certain

The Nasdaq closed at a record high on Monday, gaining 0.45%, with the S&P 500 and Dow Jones also notching gains of 0.21% and 0.25%, respectively, on hopes that lower borrowing costs are on the way. 

Keep reading to find out about the most recent news and what to expect from the week ahead. 

US Job Report Highlights Slowdown 

Job creation in the US slowed in August, adding to evidence of a weakening labour market and fuelling expectations that the Federal Reserve will cut rates when it meets next week. 

Nonfarm payrolls increased by 22,000, significantly lower than the 75,000 which had been expected by economists. It also marked a considerable slowdown from the previous month’s increase of 79,000. The unemployment rate ticked up to 4.3%, rising from 4.2% in July. 

That the Fed will cut rates at its next meeting no longer seems to be in question. According to the CME FedWatch tool, the markets now view a cut of at least 25 basis points as a certainty and are pricing in an 11.6% chance of a jumbo 50 basis point cut. 

Dollar Dips, Gold Soars

In the wake of the latest US job report, the dollar declined on Monday and traded around a six-week low on Tuesday morning.  

US Treasury yields have also dropped sharply in recent days on the prospect of lower interest rates (bond yields move inversely to price). On Monday, the benchmark 10-year Treasury yield fell to a five-month low. 

Gold continued its recent rise, surging past $3,600 an ounce for the first time and closing at a record high on Monday. 

Elsewhere, oil prices ticked upwards, after OPEC+ agreed to increase production more modestly than had been anticipated. Oil prices are also receiving support from the prospect of tighter sanctions on Russia, following recent strikes on Ukraine. 

What to Look Out for This Week

Later on Tuesday, the annual Apple Event will take place, at which the tech giant is expected to launch a new slimmer iPhone model, the iPhone Air, alongside the iPhone 17.

The remainder of the week will also see a number of key economic announcements which traders and investors might want to keep an eye on:

• Wednesday:  
  • US Producer Price Index (PPI) August 
• Thursday:  
  • European Central Bank (ECB) interest rate decision 
  • US Consumer Price Index (CPI) August 
• Friday:  
  • UK Gross Domestic Product (GDP) July 

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