Mid-Week Market Minute 08.03.22

Market Updates

Stocks were modestly lower in early trading this week as markets remained cautious amid heightened geopolitical tensions. Capturing headlines this week was U.S. House Speaker Nancy Pelosi’s high-profile visit to Taiwan on Tuesday, a symbolic trip that provoked an angry response from China (Beijing views Taiwan as its territory). As of Wednesday, the S&P 500 was lower by about 0.20% for the week. Treasury yields moved higher, as investors digested several comments from Federal Reserve officials indicating the central bank may have to remain more aggressive in their fight against inflation. Today, another wave of Fedspeak should be closely watched, with regional Fed presidents James Bullard, Patrick Harker, Mary Daly, Tom Barkin, and Neel Kashkari all set to deliver remarks at separate engagements.

The next Federal Reserve meeting is not until Sept. 20-21, and futures markets now are almost evenly divided in expecting a 0.50% or 0.75% rate hike at that meeting. According to FedWatch data, short-term rates currently are projected to rise about another 1% in total for the remainder of the year from the current range of 2.25-2.50%.

On the data front, the Jobs Openings and Labor Turnover Survey (JOLTS) showed 10.6 million available positions in June, easing more than expected from the prior month’s 11.3 million openings. Separately, MBA mortgage applications increased for the first time in five weeks, rising 1.2% following the previous period’s 1.8% decline. Finally, the jobs report for July is due out on Friday, with consensus expectation of a 250,000 increase in nonfarm payrolls, and a 3.6% unemployment rate. Markets will keep a close eye on the report for signs of softening demand for labor against the backdrop of growing economic pressures.

Source: GSAM, CNBC, JPMorgan

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