{"id":406828,"date":"2025-09-08T03:27:11","date_gmt":"2025-09-08T03:27:11","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/406828\/"},"modified":"2025-09-08T03:27:11","modified_gmt":"2025-09-08T03:27:11","slug":"wall-street-update-fed-rate-cut-anticipation-rises-as-us-equities-decline-after-weak-jobs-report","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/406828\/","title":{"rendered":"Wall Street update: Fed rate cut anticipation rises as US equities decline after weak jobs report"},"content":{"rendered":"

US equities decline amid rate cut\u00a0expectations\u00a0<\/p>\n

Unietd States (US) equity<\/a> markets finished lower on Friday, despite a weaker-than-expected August jobs report that nearly guarantees the Federal Reserve (Fed)<\/a> will resume its rate-cutting cycle in ten days.<\/p>\n

Non-farm payrolls<\/a> rose by just 22,000 in August, well below the upwardly revised 79,000 in July and market forecasts of 75,000. The unemployment rate increased to 4.3% in August from 4.2%, in line with expectations, marking the highest rate since October 2021.<\/p>\n

Potential for aggressive Fed rate cuts<\/p>\n

The softer jobs numbers observed over the last week make a 25 basis point (bp)<\/a> cut from the Fed seem almost certain at the 17 September Federal Open Market Committee (FOMC)<\/a> meeting. However, if this week\u2019s Bureau of Labor Statistics (BLS) labour market revision reaches or exceeds the top end of the whisper range – between 650,000 and 900,000 – calls for a 50 bp cut will likely intensify.<\/p>\n

Regardless of whether the Fed initiates with a 25 bp or a 50 bp cut in September, after the Fed’s dovish<\/a> pivot at Jackson Hole – where the risk<\/a> of a labour market slowdown was highlighted as a more significant concern than persistent inflation<\/a>\u00a0– the expectation is for a more aggressive series of Fed rate cuts into 2026.<\/p>\n

To that end, the US interest rate<\/a> market is pricing in about 68 bp of Fed rate cuts by year-end. A cumulative 150 bp of Fed rate cuts is priced between now and December 2026.<\/p>\n

Upcoming economic updates<\/p>\n

Looking ahead, aside from Tuesday night’s BLS labour market revisions, the key event on this week\u2019s US data calendar is Thursday night\u2019s consumer price index (CPI)<\/a> report, previewed below.<\/p>\n

US CPI<\/p>\n

Date: Thursday, 11 September at 10.30pm AEST<\/b><\/p>\n

For July, headline inflation in the US increased by 0.2%, in line with expectations. This saw the annual rate of headline inflation remain at 2.7% in July, unchanged from June, and below the forecast of 2.8%.<\/p>\n

The annual core CPI, which excludes volatile items like food and energy, rose by 0.3%, pushing the annual core inflation rate up to 3.1%, the highest in five months and further away from the Fed’s 2% inflation target.<\/p>\n

For August, the expectation is for the annual headline inflation rate to rise to 2.9%, which would be its highest reading since January, and for the core measure to remain at 3.1% year-over-year (YoY).<\/p>\n

Nonetheless, as noted above after the Fed’s dovish pivot at Jackson Hole, the expected uptick in headline inflation is unlikely to prevent the Fed from cutting rates at its meeting on 17 September.<\/p>\n

US core inflation chart<\/p>\n

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