Invesco EMEA’s Post

🗽 💲 🗽 💲 🗽 💲 The US labour market is showing strong job growth and lower unemployment, indicating a robust economy amidst geopolitical and domestic hurdles. As the US prepares for a soft landing after the Fed rate cuts and geopolitics continue to escalate, will the strong economy last? Our research team takes a closer look. Key take-aways: + The US is all about fine-tuning the soft-landing trajectory. The latest jobs report points to lower recession risks and a robust economy. 📈 + The Federal Reserve is unlikely to ease monetary policy aggressively, opting instead for smaller interest rate cuts. 📉 + The conflict in the Middle East is boiling over and ignites fears of escalation and oil supply disruptions. 🛢️ ⛽

Recent data from the U.S. Federal Reserve highlights a slowdown in economic activity and a softening labour market, supporting the likelihood of imminent rate cuts and a surge in global liquidity. The Fed's latest survey shows that while seven of its districts experienced some growth, five saw flat or declining activity. The unemployment rate hit a 2.5-year high, and wage growth has slowed. These developments align with the Fed's strategy to manage inflation and labour market conditions, suggesting potential rate cuts later this year. Read the full article here 👇

Today's NFP numbers, more than just a weaker-than-expected reading, are a significant indicator of a continued slowdown in the labor market. This is a crucial piece of information as the US heads into the final sprint before the election, adding renewed pressure to the economic landscape. While this does imply that the odds of a 50 bps cut have increased, I wouldn't read this under the usual 'good news is bad news' motto. Economic conditions are deteriorating more quickly than previously expected, indicating the Fed may be falling behind the curve again. Moreover, perhaps even worse than the numbers themselves are the massive revisions in past readings. Such revisions are only coherent with periods of severe economic crisis and should raise further alarms on the actual state of the labor market.  With pressures mounting on J Pow & company, the possibility of a more ad-hoc economic policy path going forward likewise increases, leading to higher uncertainty for both companies and investors. Against this backdrop, the yield curve is fast dis-inverting, and such bull steepening cycles are usually more positive for hard assets such as gold than other higher-risk plays such as equities. Moreover, this does not bode particularly well for the market's current post-Q2-earnings cycle, which prompted investors to sell tech in favor of more revenue-focused, value-driven plays. However, the market has now begun to reckon that these stocks are generally sensitive to the economic environment, which could also lead to further volatility. Read more about today's report on Investing.com https://shorturl.at/PNe7O

Waiting for interest rates to come down further so you can buy that house or finally splurge on that car? That's looking less likely after the latest jobs report showed the U.S. economy ending 2024 on a high note adding 256,000 jobs in December. While that also sent the stock market into a downward spiral, the seemingly rosy state of the job market may actually see the Fed raising interest rates this year. It seems counterintuitive, doesn't it? In a normal world, good news such as a healthy job market would raise stocks and have people jumping for joy. But, we know economics doesn't work that way. Underlying all this is the Grinch that continues to give year round even though we've had more than our fair share - inflation. Paying more all around...that's the constant fear. After nearly two years of wrangling to slow down what was a hot economy where jobs were a plenty like jelly beans and cash flowed like grape soda, inflation is rearing its head again. The different is time around is that wages have cooled considerably so while jobs are available, they're not paying as well. Even in the days of a hot economy, wages weren't keeping up with inflation. Tariffs, tariffs, tariffs. Strong economy or not, a looming era of tariffs is enough to spur concerns among companies across industries, from small to large. Depending on how those tariffs are implemented and the response from other countries, namely China, we could see inflation rise once again. I guess that may spurn interest rates hikes, though that's not much of a silver lining https://lnkd.in/gvEbcDGg #interestrates #economy #inflation #jobs #federalreserve #tariff #business #consumer

After the September jobs report showed the U.S. added more jobs than expected last month, Client Portfolio Manager Brian Mulberry questioned the Fed’s latest rate cut and what the data will mean for monetary policy moving forward. He shared his take with Vivien Lou Chen of MarketWatch, noting, “‘They might be easing too much, too fast right now in a way that sparks more inflation down the road.” Read more here: https://lnkd.in/gFNuUWC5 #Inflation #Employment #Economy #InterestRates

Friday's economy metrics fully supported Moody's @markzandi 's 9/29/24 analysis- "I’ve hesitated to say this at the risk of sounding hyperbolic, but with last week’s big GDP revisions, there is no denying it: This is among the best performing economies in my 35+ years as an economist. Economic growth is rip-roaring, with real GDP up 3% over the past year. Unemployment is low at near 4%, consistent with full employment. Inflation is fast closing in on Fed’s 2% target - grocery prices, rents and gas prices are flat to down over the past more than a year. Households’ financial obligations are light, and set to get lighter with the Fed cutting rates. House prices have never been higher, and most homeowners have more equity in their homes than ever. Corporate profits are robust, and the stock market is hitting a record high on a seemingly daily basis. Of course there are blemishes, as lower-income households are struggling financially, there is a severe shortage of affordable homes, and the government is running large budget deficits. And things could change quickly. There are plenty of threats. But in my time as an economist, the economy has rarely looked better." #economy #boom #growth #manufacturing #CHIPS #IRA #infrastructure #integration

Strong job growth and low unemployment signal the Fed may limit rate cuts in 2025, keeping borrowing costs higher for longer - especially with Trump re-entering the political landscape. How are you preparing for this challenging economic environment?

📊 The U.S. labor market has returned to pre-pandemic levels, potentially bringing Federal Reserve rate cuts closer. As employment figures stabilize, the Fed may consider easing monetary policies to support sustained economic growth. This development signals a significant step towards economic normalization and could influence investment strategies in the coming months. ING James Knightley #LaborMarket #EconomicTrends #FederalReserve #Investment #MarketInsights

Data released today, and completely ignored by the market, show that the US unemployment rate calculated using state-level data continued to increase in October, with the uptrend intensifying since the summer. The report below discusses why I raised my recession probability following Trump’s victory, and why the US labor market is not nearly as strong as it appears. https://lnkd.in/gqTYfynN

I found an insightful article in Financial Times on how the US economy is holding strong as the presidential election approaches. My top takeaways: ⭐ US GDP grew by 2.8% in Q3, just below expectations, showcasing consumer strength despite inflation. ⭐⭐ Consumer spending accelerated to 3.7%, while private-sector job growth added 233,000 roles in October, signalling continued economic stability. ⭐⭐⭐ Economists are hopeful for a “soft landing,” with the Fed’s recent rate cuts and a healthy job market helping ease inflation without major job losses. This article explores how the US economy is surpassing other major economies, driven by consumer confidence and a resilient job market. Definitely worth a read!