Three-quarters point fed funds rate boost in September not off the table, investors say
Jim Paulsen, chief investment strategist at Leuthold Group, said August’s nonfarm payrolls report isn’t the final word for the Federal Reserve as to September rate policy.
“I think we’ll have to get through the CPI report. This doesn’t take 75 off the table but it leans it more toward 50,” Paulsen said.
The Fed next meets in three weeks, on Sept. 20-21.
Greg Faranello of AmeriVet Securities said the fed funds futures had an 80% chance of a 75-basis point hike for September before the August jobs report. That has now fallen to just under 70%.
Ben Jeffery, BMO rate strategist, said the 2-year Treasury yield is moving the most Friday, reflecting lowered expectations for Fed rate hikes. The odds of a 75-basis point rate hike in September shifted slightly lower after the report.
August payrolls were “good in terms of the Fed’s goals and it was pretty much consensus in terms of what the Street was looking for,” Jeffery said. “It should offer a little bit of calm to the market after the volatility this week.”
— Scott Schnipper and Patti Domm