August Jobs Data Boosts September Rate Hike Odds
The US economy showed stronger-than-expected growth in August, adding 162,000 new jobs and revising upward by 55,000 from previous months. This has boosted the likelihood of a September Federal Reserve rate hike, according to ING's James Knightley.
Knightley notes that steady unemployment at 4.1% and benign wage growth are positive indicators, but sector concentration in job gains is a concern. The market has responded by pricing in a 16-basis-point rate hike, up from 12.5 basis points yesterday.
The final decision on a September rate hike hangs on next Friday's inflation data, which will be crucial for the Federal Reserve's consideration. A soft inflation print could mean that Fed Governor Waller votes for stable policy, but if headline prices increase by 0.4% and core prices by 0.2%, it may nudge the rest of the FOMC into a hike.