Updated on September 6, 2024 10:06:05 AM EDT

Today’s big news was the August’s Employment report that showed only 142,000 new jobs were added to the economy last month when analysts were expecting 160,000. Also in the good news column were downward revisions to June and July’s payroll numbers that lowered the combined job count by 86,000 from previous estimates.

Unfortunately, both of the other two headline numbers that we follow in the report were not good news. The unemployment rate slipped from July’s 4.3% to 4.2%, as expected. Bad news came in the average hourly earnings reading that rose 0.4% last month and 3.8% annually. Forecasts had the monthly reading up 0.3% and annual at 3.7%. Particularly troublesome was the annual increase from July’s 3.6%.

These higher earnings numbers are a sign of wage inflation that easily spreads to other parts of the economy. It is this reading that is likely preventing a stronger positive reaction in the bond and mortgage markets. They also make a half-point rate cut by the Fed later this month less likely. The consensus is a quarter point move at the September 17-18 FOMC meeting.

Next week starts off light with nothing of relevance scheduled for Monday or Tuesday morning. The first event that we can expect a reaction to is Tuesday evening’s Presidential Debate and that may not be a market mover. However, Wednesday and Thursday bring us a couple of key inflation readings during morning trading and auction results early afternoon. We should see the most movement in rates midweek, barring any major headlines over the weekend. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

 ©Mortgage Commentary 2024