Good morning,
Markets limped into the long holiday weekend on Friday following the release of the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index. While broadly in line with economists’ estimates, the report confirmed a firmer price environment than in recent months. Futures sold off immediately, and the S&P 500 fell -0.64% on the day, leaving the index down -0.10% for the week. Most other major indexes also finished the week little changed.
The reprieve from negative headlines that accompanied the April–August tariff freeze has ended. We are now likely entering a stretch where the economic consequences of new tariffs begin to weigh on the market—slowly this month and more significantly into year-end. With indices at or near all-time highs, the market may prove less forgiving of rising prices or slowing growth.
This week, employment data will dominate. JOLTs Job Openings (Wednesday), ADP Employment, Challenger Job Cuts, and Jobless Claims (Thursday), all lead into the week’s centerpiece on Friday: the August Nonfarm Payrolls report. Economists expect payrolls to rise by just 75k jobs. That’s a low bar, but should the number disappoint, markets may quickly call for the Fed to deliver a 50-bp cut in September.
No note from me this Friday—I’ll be out getting fitted with a new knee. I’ll be back Monday to recap any late-week market shenanigans.
Be well,
Mike