NFP Report Sparks Rate Hike Fears and Dollar Strength
The strong Non-Farm Payroll (NFP) report released last week sent shockwaves through financial markets, pushing up the probability of a Federal Reserve rate hike at the September meeting to approximately 58%.
The US economy created 162,000 nonfarm payroll jobs in August, tripling the market consensus of around 55,000. The unemployment rate remained steady at 4.1%, while average hourly earnings rose 0.3% month over month.
President Donald Trump responded to the news by calling for an immediate interest rate cut from the Federal Reserve, arguing that a strong economy means better creditworthiness for the country. However, economists point out that cutting off trade would trigger a supply shock and an inflation spike, forcing the Fed to tighten monetary policy further.