August Jobs Report Pivotal for Fed Rate Hike Decision
The Federal Reserve's September rate hike decision hangs in the balance as Friday's August jobs report looms large. The CME FedWatch futures currently price a 50-50 split between a pause at 3.50%, 3.75% and a 25-basis-point hike at the Sept. 16 FOMC meeting.
Rate-hike odds surged past 63% following Chair Kevin Warsh's Jackson Hole address, but cooled after Governor Christopher Waller signaled support for a hold. The jobs report is now seen as the key tipping point, with economists expecting a rebound in job growth from a loss of 23,000 jobs in July to a gain of about 56,000 in August.
The unemployment rate is projected to remain at 4.1%, while average hourly earnings are expected to rise 0.3% on the month, dragging the annual rate down to 3.0%. However, the published forecasts span 85,000 jobs from bottom to top, indicating a high degree of uncertainty.