Key facts
- Investors are closely watching upcoming US jobs and inflation data to gauge the Federal Reserve's interest rate path.
- Major equity indexes remain near record highs, with the S&P 500 slightly below its August peak.
- Treasury yields have continued to climb, with the 30-year yield hitting a 20-year high and the 10-year yield surpassing 5%.
- The September US nonfarm payrolls report is expected to show 100,000 job gains and a 4.2% unemployment rate.
- The Fed hiked rates by 0.25 percentage points on September 16 and signaled further increases.
- Fed Funds futures indicate a greater than 60% chance of another rate hike in October.
Investors are bracing for a pivotal fourth quarter as key economic data releases, including employment and inflation figures, are set to influence the Federal Reserve's interest rate trajectory. Major equity indexes have shown resilience, hovering near record levels despite rising Treasury yields, which have reached multi-year highs.
The upcoming September US nonfarm payrolls report, due October 2, is expected to show 100,000 job gains and an unemployment rate of 4.2%. This data, along with the monthly personal consumption expenditures (PCE) price index due Wednesday, will be crucial for assessing economic strength and inflationary pressures. The Fed, which raised rates by 0.25 percentage points on September 16, has signaled further increases, with Fed Funds futures suggesting a greater than 60% chance of another hike in October.
While the broader market averages have held up, pockets of the stock market have struggled in September, with nine of 11 S&P 500 sectors in negative territory for the month. The heavyweight tech sector, however, has gained, driven by AI-linked stocks. Micron Technology, a memory chipmaker, is set to report quarterly results on Wednesday, which will be a key test for the AI trade.