Weak Jobs Data: Fed, Please Put A Rate Hike On Ice

There you have it. 

Jobs print that no one can, or will, be happy about. Just 173,000 jobs added in the month of August, versus expectations of 220,000.

A print like this leaves global markets with little guidance on what the Fed will do with U.S. interest rates when it meets on September 17.

Europe has worsened off the headline, and futures are slightly lower off this data point, as well.

Of course, despite jobs being added at a rate that was lower-than-expected, the unemployment rate continues to tick lower -- to 5.1% versus expectations of 5.2%, which is the lowest level since March 2008. 

Richmond Fed president Jeffrey Lacker has already been on the wires saying that the jobs number is good, and that it does not change the picture for monetary policy.

The unemployment rate may be indicating that things are great at home -- but on the other hand, other data points are not consistent enough to warrant a rate hike: Inflation is nowhere in sight and the jobs data to aim for should be a consistent addition of 250,000 a month, for a few months. We are not there yet, no matter what the Fed is saying -- and will say going forward.

Summing it up:

  • No wage pressure;
  • No inflation;
  • Jobs created at less than the consistent, 250,000-per-month rate that would spell an optimal situation.

Here is my take: I am sticking with my view that conditions globally do not warrant a rate hike here, at home, and that the Fed will more than likely be forced to wait until things improve toward the end of the year, and then pull the trigger in 2016.

If I am wrong, the Fed will be wrong as well, and a premature rate hike will have negative repercussions that will reverberate far beyond our shores.

Our futures are now down 1.5%.

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