Global financial markets are having a meltdown (tantrum) moment to start the week in the wake of Friday’s U.S. jobs report.
Japan’s Nikkei index plunged more than 12%, including a 17% drop in Japanese bank stocks. European equities are down 3-4%, and U.S. equity futures are currently down 3-6%, with the tech-heavy NASDAQ experiencing the biggest decline. The risk-off trade has Treasury yields sharply and steeper again, with the 2-year note yield currently down 22 bps at 3.66%. Also contributing to the somber tone in financial markets are reports that Iran and its proxies could attack Israel as soon as today.
Fed funds futures are now pricing 137 basis points (bps) of rate cuts by year end, including 50 basis point moves at the next two FOMC meetings. Multiple Wall Street banks, including J.P. Morgan, shifted to a similar forecast over the weekend. Was the July jobs report that concerning? On its own, it didn’t appear so. The various components of the report were softer than expected, which was enough for markets that have been biased for easier Fed policy for some time to pounce on it. Also, the tech sector continues to struggle, with one report suggesting that Warren Buffet is selling half of his Apple position. The VIX index, which tracks implied volatility on the S&P 500, has effectively tripled over the last two trading days to the highest level since March 2020 amid the Covid panic. Later this morning, the July ISM Services Index will be released, and two Fed leaders will make public appearances today (Goolsbee and Daly).
Jason Haley
Chief Investment Officer
| Date | Event | Survey | Actual | Prior | Revised |
| 8/5/2024 | S&P Global US Services PMI | 56 | — | 56 | — |
| 8/5/2024 | S&P Global US Composite PMI | — | — | 55 | — |
| 8/5/2024 | ISM Services Index | 51 | — | 48.8 | — |
| 8/5/2024 | ISM Services Prices Paid | 55.1 | — | 56.3 | — |
| 8/5/2024 | ISM Services Employment | 46.4 | — | 46.1 | — |
| 8/5/2024 | ISM Services New Orders | 49.8 | — | 47.3 | — |
| 8/5/2024 | Senior Loan Officer Opinion Survey on Bank Lending Practices | ||||
| 8/6/2024 | Trade Balance | -$72.5b | — | -$75.1b | — |
| 8/7/2024 | MBA Mortgage Applications | — | — | -3.90% | — |
| 8/7/2024 | Consumer Credit | $10.000b | — | $11.354b | — |
| 8/8/2024 | Initial Jobless Claims | 243k | — | 249k | — |
| 8/8/2024 | Continuing Claims | 1876k | — | 1877k | — |
| 8/8/2024 | Wholesale Trade Sales MoM | — | — | 0.40% | — |
| 8/8/2024 | Wholesale Inventories MoM | 0.20% | — | 0.20% | — |
| 8/12/2024 | NY Fed 1-Yr Inflation Expectations | — | — | 3.02% | — |
| 8/12/2024 | Monthly Budget Statement | — | — | -$66.0b | — |
