What we learned last week:
“Winds blow south, or winds blow north,
Some future summer bursting forth,
To verdant leaves, or sheltering shade,
To nourishing fruit, apples and grapes, blackberries in summer,
And love and faith, like scented roses blooming.”
– Walt Whitman, Summer
Major indexes continue to grind forward. The headline event last week was the US unemployment report. This is a key data point for the economy and interest rate policy set by the Federal Reserve. Renewed tensions in Iran and higher prices for barrels of crude added market volatility, giving energy stocks the push to finish the week as the best performing sector.
One point of stress for the market has been the rise of bond interest rates globally. In addition to inflation concerns, the U.S. government budget deficit is forcing the government to borrow more to pay its bills. Also, tech firms are borrowing heavily to build out the data centers powering AI.
U.S. Treasury Secretary Scott Bessent downplayed the overall rise in yields in an interview last week with CNBC during the G20 finance ministers’ meeting, saying “I don’t think we are in any kind of a dire situation.” He pointed to the fact that other countries’ (U.K., Germany, and Japan) have seen bigger yield increases. Nonetheless, investors are selling their bonds and buying far fewer of them than they did in the recent past.
Sticking with the economy, Friday’s much anticipated Nonfarm payrolls report from the Bureau of Labor Statistic showed 162,000 new jobs for the month of August, much higher than the 53,000 payrolls increase expected by Economists surveyed by Down Jones. The report affirms the labor market is stable, with unemployment rate holding steady at a healthy 4.1%.
In addition to better-than-expected August report, July’s payroll number was revised from a loss of 23,000 to a gain of 21,000 and June’s revision added 11,000 jobs for a total gain of 31,000 for the month. A concerning note for workers, aka the consumer, is the growth slowdown in average hourly earnings. The year-over-year change in August registered at 3.1% down from 3.8% at the end of 2025.
Wrapping up this week’s recap we end with events in Iran. Last week’s attacks marked the most substantial exchange of fire between the U.S. and Iran since July. Oil hit a 6-week high last week. Attacks over the weekend on Saudi Arabia’s energy operations pushed crude oil futures near $100 during the Labor Day holiday.
Looking ahead, events out of the Middle East will continue to have investors’ attention as the cost of energy is a large input in most businesses. The spotlight this week will most likely be on Friday morning’s Consumer Price Index report – this will be the last gauge of inflation going into a Fed meeting and their rate decision the following week.
What’s ahead this week:
Economic Reports
- The final reading on inflation before the Fed’s meeting September 16, Consumer Price Index (CPI) will be released. Investors are anticipating 0.25% rate hike out the Fed. This CPI report may need to print at or below the expected 3.4% year-over-year increase for markets to change the view on rate hikes.
Earnings
- Artificial Intelligence in the software industry will be closely watched as Oracle and Adobe report earnings Thursday.
- Retailer Macy’s also reports earnings on Thursday.
My goal is for you to feel educated and informed about variables we do and don’t have control over and find ourselves working within. I hope to do it in an informative and relatable way. As always, I value your relationship and planning objectives – my door is always open for conversation.
