Latest news with #VeronicaClark
Yahoo
02-08-2025
- Business
- Yahoo
Market in a 'reckoning period' with weak jobs data & tariff hikes
The US added 73,000 jobs in July, a big miss from the 104,000 that economists were expecting. Unemployment also ticked up to 4.2% as estimated. Additionally, President Trump announced a flurry of new tariff rates overnight. Interactive Brokers chief strategist Steve Sosnick, Citi economist Veronica Clark, UBS Global Wealth Management head of taxable fixed income strategy Leslie Falconio join Morning Brief with Julie Hyman to discuss the impact of a weakening labor market in combination with President Trump's tariffs. To watch more expert insights and analysis on the latest market action, check out more Morning Brief. Speaking of the push pull, you've got the, you know, maybe, I don't know which is a push and which is a pull. You've got the weakening, uh, what looks like a weakening labor market on the one hand. And then on the other hand, you have overnight, President Trump announcing these tariff rates. What looks like is going to be an average tariff on goods coming to the US of at least 15%, some estimates would put it even higher, which in theory would at least cause a temporary upward pressure on inflation, which means the Fed is maybe in a tougher spot than ever. Yeah, it's it's certainly not the ideal spot for the Fed. Um, and I think we probably will see more, you know, goods price increases. We just started to see that really in in June. Um, but if the labor market is weakening, then it really comes down to, you know, do we think these tariff increases are going to lead to persistent inflation? Um, is it a supply shock like the pandemic? And that's where if the labor market is weakening, it really isn't. Um, you could see these temporary, you know, one-time kind of price level resets in in goods prices. Um, but you wouldn't expect it to spread to services. We see wages slowing. Um, home prices have actually been falling on a monthly basis the last couple months. That underlying demand backdrop just looks very different. Leslie, what does all of this mean for for bond yields and for yields sort of across the curve? You know, this is it's really interesting because, you know, as much as we look at this data and we say that the Fed should cut, but we we, you know, it's it's it wasn't that long ago when we saw what happened in, you know, September 24 when they cut 50 and the back end actually rose just because of the concern over reacceleration inflation. It's very important that the Fed doesn't cut too soon simply because market perception will lead that back end higher, which obviously won't be good for the mortgage rate. You know, I think this this number is obviously weak. I don't think it really shifts the dynamic of the fact that the Fed will cut and they have a lot of ammunition to cut. But I don't think they're going to necessarily be that preemptive. I think this is one number, you need to and we need to see the data because, you know, the be careful what you wish for, which is exactly right, and might not lead to the results that, you know, one might think. And again, when we think about these this inflation related in terms of tariffs, it's really going to depend. Is this going to be a really quick, you know, price change that happens quickly over over a few months and then falls or is it just going to gradually rise higher, but then stay elevated above the Fed's projected target for a longer period of time? So they definitely have, you know, um, a lot to deal with, but I don't think this one number necessarily changes the projection, but it doesn't necessarily mean that, you know, cutting is going to assume that long-term interest rates are going to fall. You really have to wait and see and how some of these inflation numbers due to these tariffs actually come out over the next couple months. Yeah, great point. Um, you know, and and sort of another reminder, be careful what you wish for, be careful what you expect. Um, Steve, you know, we don't seem to be in the bad news is good news, uh, vibe this morning, right? Yes, you have futures bouncing off the lows a little bit, but they're still sharply lower here. So again, that, you know, it sort of makes one question the like Fed galloping to the rescue narrative. Well, I think the the mood actually changed a little bit. I think the the the whamies of the tariffs and some of the earnings reactions, um, you know, I think I I would actually say we're almost we were almost in a situation where all news was good news for this market. And now I think there's there's been a reassessment. There's been a rejiggering of that. Um, you know, to to Leslie's point, I'm I'm seeing the the the two to 10 year, uh, yields, the curve yield curve steepening by about seven basis points. That's a that's a big move. Um, I think right now, you know, that's telling us that's telling us some longer-term worries, um, about the relative the relativity of inflation. Um, also, I just think right now, you know, that the market had sort of put tariffs in the rear view mirror and assumed that the labor market was okay. Well, both of those assumptions have been overturned quite dramatically, uh, this morning. And so I think this is this is the market going through a reckoning period, and I think it's a bit of a tell that we're not seeing a lot of reflexive dip buying because that has characterized the stock market for the last, you know, two call it two, three months, um, where every dip was perceived as a buying opportunity. And as we saw them what I would say the half-life of dips was getting so short because no one wanted to miss a buyable dip, so they were just stepping in at the smallest possible opportunity. We're actually seeing it persist for a little bit this morning. That to me tells me that the psychology, at least as of this particular moment, is a bit, uh, more tenuous than it was, let's say even a couple days ago. Um, and Veronica, you know, speaking of this sort of double whammy, I just want to ask you one more question about tariffs, which is what we learned overnight, why was it such a surprise? Yeah, I mean, I think it comes down to, you know, we have been seeing these high rates and we saw that in in, um, announced in early April. Um, but we've gotten them delayed, and maybe now we're not getting them delayed. Um, in a lot of sense, some of these rates are not too dissimilar from what we saw announced on April 2nd. Um, so there is some of this persistence to actually follow through with with what's being announced. Um, of course, these are still starting maybe a week from now, so maybe there is still more chance to get them delayed. Um, but there is more willingness on the administration to to maybe follow through.
Yahoo
01-08-2025
- Business
- Yahoo
Labor market is 'weakening' — rate cuts are 'back on the table'
The US added 73,000 jobs in July, a big miss from the 104,000 that economists were expecting. Unemployment also ticked up to 4.2% as estimated. Interactive Brokers chief strategist Steve Sosnick, Citi economist Veronica Clark, UBS Global Wealth Management head of taxable fixed income strategy Leslie Falconio join Morning Brief with Julie Hyman to discuss the numbers. To watch more expert insights and analysis on the latest market action, check out more Morning Brief. Veronica, I want to start with you. Were you surprised here by this weaker number and where do you think that weakness is coming from? Yeah, this is is definitely a weaker number and I think actually it's not so much this July number but massive downward revisions to the June number that we had last month. Um so initially that was 147,000 payrolls in June, just 14k after these revisions. Um so this definitely does look like a labor market that is weakening. Um the unemployment rate is of course the most important number here. We did see that rise to 4.2%. That's still in the range that it's been in for the last year. Um but that happened despite the labor force participation rate falling more. Um this does look like a weakening labor market. Leslie, does this change the calculus for the Federal Reserve? You know, we've always had a the expectation that the Fed would cut in September. Um obviously after the FOMC meeting that probability, the market was projecting a much lower probability that would occur only, you know, down to about 40% and only about 33 basis points of cuts for 2025. I do think that number might shift that sort of uh rhetoric going forward and we do anticipate still that the Fed starts to cut in September with, you know, consecutive cuts thereafter leading to about 100 basis points of cuts in total. So I think that, you know, as as mentioned, I think some of these revisions are more much more than what people expected. You know, I think the if if the revisions weren't uh so downward biased, you might have a different outcome. But again, when we look at some of these numbers when it comes to the, you know, unemployment rate and inflation, we're really paying attention to the rate of change versus the absolute number. But I do I do think that this is, you know, a bit on the weaker side and it does put cuts back on the table. And those revisions that Leslie was mentioning by the way, I want to tell people what they were because if you look at the two month revision, it is a decrease of 258,000. Um so again that to your point kind of shows that yes, things were maybe a little weaker than they uh looked on the surface. Just to give you an example of what that means, it means what initially looked like 147,000 in June was actually only 14,000. So that is a big difference indeed. Um Steve, as you look at these numbers and you look at the market reaction here, um obviously we were already down because of the trade headlines which we'll talk more about in a moment. Uh but now we're seeing um, you know, sort of that reaction at the very least persist here. How are you thinking about these numbers? Um well, Julie, the way I'm looking at them is you know, they're not good. There's no way to there's no way to sugar coat that. The the the two the two month revision is just staggering. It basically wipes out um two months of what we thought were were healthy job gains. So um there were some comments this morning that that that was from um Bowman and Waller that that was the reason why they dissented was they thought the labor market was was worse than it was portraying and seems that it actually might be. Um so what this is doing here, so you've got you've got a real push pull. You know, the mark on one sense traders are just enamored with the idea of interest rate cuts. Um and this certainly has to raise the likelihood of cuts in the short in the in the near term. Um it was about 40% uh 40 45% for the September meeting. I haven't been able to get a fresh look now, but it's it's got to be way up probably closer to 75 or so. Uh but one of the things about rate cuts that I've always said is be careful what you wish for if you're a stock person because sometimes the need for rate cuts is that the economy requires it. And ultimately stocks do better in a stronger economy than than one that requires the intervention from the Fed. So there's going to be a push pull today and I think I think right now the the push pull isn't enough to to move us away from the a ready negative tone that we were in at least so far.
Yahoo
01-05-2025
- Business
- Yahoo
April jobs report expected to show hiring slowed amid tariff uncertainty
The April jobs report is expected to show hiring slowed to start the second quarter while unemployment held flat. Investors are closely watching the monthly release, the first since President Trump's "Liberation Day" tariffs announcement on April 2, for signs of cooling in the labor market. The Bureau of Labor Statistics data is slated for release at 8:30 a.m. ET on Friday. Economists expect nonfarm payroll to have risen by 135,000 in April while the unemployment rate held steady at 4.2%, according to consensus estimates compiled by Bloomberg. In March, the US economy added 228,000 jobs. Meanwhile, the unemployment rate ticked higher to 4.2%. Here are the numbers Wall Street is expecting Friday, according to data from Bloomberg: Nonfarm payroll: +125,000 vs. +228,000 in March Unemployment rate: 4.2% vs. 4.2% Average hourly earnings, month over month: +0.3% vs. +0.3% Average hourly earnings, year over year: +3.9% vs. +3.8% Average weekly hours worked: 34.2 vs. 34.2 The release comes as impacts from Trump's tariffs have begun to show up in economic data. On Wednesday, a new release from the Bureau of Economic Analysis showed economic growth contracted for the first time in three years during the first quarter. A surge in imports ahead of the levies weighed on growth in the quarter. Tariffs have also negatively impacted activity in the manufacturing sector and weighed on various consumer sentiment surveys. Read more: The latest news and updates on Trump's tariffs But thus far, the effects haven't fully spilled over into labor market data. Economists expect that trend to largely continue with the April jobs report. "Similar to March, solid April data may feel stale as it reflects labor market conditions during the first two weeks of the month, likely too soon to reflect employment decisions made after the April 2 tariff announcement," Citi economist Veronica Clark wrote in a note previewing the release. Recent data, however, has shown some signs of cooling in the labor market. On Thursday, data from the Department of Labor revealed weekly claims for unemployment benefits hit their highest level in two months during the final full week of April while the number of Americans filing for unemployment insurance on an ongoing basis reached the highest level since November 2021. The release followed a weaker-than-expected reading of private payroll additions for April on Wednesday and data out Tuesday showing job openings at the end of March hovered near their lowest level since December 2020. "Unease is the word of the day," ADP chief economist Nela Richardson said in the April private payroll release. "Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data. It can be difficult to make hiring decisions in such an environment." Entering Friday's report, markets are pricing in a 60% chance that the Federal Reserve resumes interest rate cuts at its June meeting, per the CME FedWatch Tool. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Yahoo
01-05-2025
- Business
- Yahoo
April jobs report expected to show hiring slowed amid tariff uncertainty
The April jobs report is expected to show hiring slowed to start the second quarter while unemployment held flat. Investors are closely watching the monthly release, the first since President Trump's "Liberation Day" tariffs announcement on April 2, for signs of cooling in the labor market. The Bureau of Labor Statistics data is slated for release at 8:30 a.m. ET on Friday. Economists expect nonfarm payroll to have risen by 135,000 in April while the unemployment rate held steady at 4.2%, according to consensus estimates compiled by Bloomberg. In March, the US economy added 228,000 jobs. Meanwhile, the unemployment rate ticked higher to 4.2%. Here are the numbers Wall Street is expecting Friday, according to data from Bloomberg: Nonfarm payroll: +125,000 vs. +228,000 in March Unemployment rate: 4.2% vs. 4.2% Average hourly earnings, month over month: +0.3% vs. +0.3% Average hourly earnings, year over year: +3.9% vs. +3.8% Average weekly hours worked: 34.2 vs. 34.2 The release comes as impacts from Trump's tariffs have begun to show up in economic data. On Wednesday, a new release from the Bureau of Economic Analysis showed economic growth contracted for the first time in three years during the first quarter. A surge in imports ahead of the levies weighed on growth in the quarter. Tariffs have also negatively impacted activity in the manufacturing sector and weighed on various consumer sentiment surveys. Read more: The latest news and updates on Trump's tariffs But thus far, the effects haven't fully spilled over into labor market data. Economists expect that trend to largely continue with the April jobs report. "Similar to March, solid April data may feel stale as it reflects labor market conditions during the first two weeks of the month, likely too soon to reflect employment decisions made after the April 2 tariff announcement," Citi economist Veronica Clark wrote in a note previewing the release. Recent data, however, has shown some signs of cooling in the labor market. On Thursday, data from the Department of Labor revealed weekly claims for unemployment benefits hit their highest level in two months during the final full week of April while the number of Americans filing for unemployment insurance on an ongoing basis reached the highest level since November 2021. The release followed a weaker-than-expected reading of private payroll additions for April on Wednesday and data out Tuesday showing job openings at the end of March hovered near their lowest level since December 2020. "Unease is the word of the day," ADP chief economist Nela Richardson said in the April private payroll release. "Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data. It can be difficult to make hiring decisions in such an environment." Entering Friday's report, markets are pricing in a 60% chance that the Federal Reserve resumes interest rate cuts at its June meeting, per the CME FedWatch Tool. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. Sign in to access your portfolio
Yahoo
11-03-2025
- Business
- Yahoo
January JOLTS: Is the economy positioned to withstand shock?
The latest Job Openings and Labor Turnover Survey (JOLTS) results found job openings to have risen to over 7.7 million in the month of January. This comes after the US Bureau of Labor Statistics (BLS) reported the labor market to have grown by 151,000 non-farm payroll jobs in February, a jump from January's jobs figure but still a notch below economists' February forecasts of 160,000. Citi economist Veronica Clark sits down with Madison Mills and Kenny Polcari on Catalysts to discuss the JOLTS data and her view on whether the slowing economy feeds into recession fears. To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
