U.S. jobs numbers and the Fed

In this week’s video update:

What might an uneventful August mean for volatility in September?
With a relatively flat Russell 1000® and STOXX 600® oil volatility was the exception to the calm.
Friday’s U.S. jobs market may be a key indicator of the U.S. Federal Reserve (Fed) September-vs-December rate hike decision.

On this week’s update, Director, Investments, Investments Practice Bindu Sutaria meets with Chief Investment Strategist, Erik Ristuben to discuss the week’s market events and whether or not August was the calm before September’s storm.

Ristuben paints a flat picture of the end of August, with the main market and economic news being the week’s lack of news. He points out the flat performance of the Russell 1000^®, the STOXX 600^® and the Russell Emerging Markets Index^®, and notes that oil’s relative volatility is one of the few exceptions to the calm of the market.

However, Ristuben does note that unit labor costs seem to be rising, which will continue to put pressure on earnings for the rest of 2016, a point investors should pay attention to.

With U.S. jobs numbers coming out on Friday of this week (the day after filming), Ristuben notes it would likely take a jobs number north of 200,000 to push the Fed to consider a September rate hike. However, with the U.S. non-farm payroll jobs increasing by just 151,000 in August, Ristuben believes it is more likely the Fed will hold off on a rate hike until December, which Russell Investments has predicted for some time.

Currency is another area of focus, with Japan’s quantitative easing having what appears to be the desired impact of weakening the Japanese Yen.

Finally, in a month of low volatility, Ristuben points out the particularly non-volatile U.S. Treasury market, where those bonds are apparently being priced primarily by negative interest rates in other parts of the world.

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Do you think the Fed will raise rates in September based on the August jobs numbers?