The August jobs report comes out Friday at 8:30 Eastern. The Fed meets two weeks after that, on September 15 and 16. The Fed's next move might be a hike rather than a cut, which is why this month's report is getting more attention than the usual monthly release.
Why A Hike Is On The Table
The target range is 3.5% to 3.75% and has been since July, when the committee voted 9 to 3 to hold. All three dissenters wanted a quarter point higher. That's the first time in about a decade that three members have dissented in the same direction.
Kevin Warsh then spoke at Jackson Hole on Friday. He said this summer's inflation readings came in better than expected, but that they don't tell him the underlying trend has improved. He wants inflation heading toward 2% "clearly and at sufficient speed."
Markets repriced after that. Before the speech, the odds of no change in September were around 70%. Afterward, Kalshi had a quarter-point hike at 48%, Polymarket at 49%, and fed funds futures at about 56%. So it's roughly even either way. The two-year yield went to its highest level since late July, though stocks held up fine. The S&P closed at 7,711.76 and finished the week up about half a percent.
Why This Particular Report
It's the last major data release before the Fed goes quiet ahead of the meeting. The September meeting also comes with a dot plot, so the decision carries a forecast for the rest of the year along with it.
The other reason is last month. Economists expected 85,000 jobs in July. Payrolls fell by 23,000 instead, the weakest reading of the year, and hike expectations came down for several weeks afterward. The unemployment rate ticked down to 4.1% in the same report, which made the whole thing harder to read than usual.
For August, the consensus is roughly 58,000 jobs, unemployment holding at 4.1%, and average hourly earnings up 0.3%.
What Either Outcome Means
A stronger number gives Warsh the case he seems to be looking for.
A weaker number is harder to interpret. The Fed would be looking at a labor market that's shrinking while inflation still hasn't come down as much as it wants. Lately, soft jobs data has pushed stocks up, on the reasoning that it takes a hike off the table. Whether that still applies after Friday's speech is an open question.
The Rest Of The Week
JOLTS on Tuesday at 10, with Dell reporting after the close. Dell usually gets read as a check on AI server demand.
Wednesday is the busier day for tech. Broadcom reports after the bell, along with Snowflake and HPE. ADP comes out that morning.
Thursday, Tesla holds an invite-only event in Austin for the production Cybercab: two seats, no steering wheel, no pedals. ISM services is out the same morning, and lululemon reports after the close.
Monday is Tim Cook's last day as Apple CEO. John Ternus takes over Tuesday and Cook becomes executive chairman. The handover lands about two weeks before Apple's usual September product event.
A Note On September
September has averaged a loss of 0.59% since 1940, and about 1.10% in midterm years. It's a real pattern but a thin one, and worth roughly what any other seasonal statistic is worth.
The AAII survey has bears ahead of bulls for a sixth straight week, with bulls at 32.9%. That's a fairly cautious reading for a market trading near its highs.