The CME Group’s FedWatch, meanwhile, is counting on a 65.5% chance of a 75 basis point rate hike from the Fed at its next policy meeting in September, up from just 55% a week ago and just 28% at the start of the month. .
The Fed’s renewed interest rates put both Friday’s jobs report and its next inflation reading on Sept. 13 into what has historically been the toughest month of the year for the market.
The labor market was the best-performing sector for the economy this summer, with 528,000 new job openings in July, pushing the overall unemployment rate to a nearly five-decade low of 3.5%.
However, that growth rate is likely to slow sharply in August, with forecasters looking to create a total of 285,000 new jobs for the world’s largest economy. However, wages are likely to rise as more than 11 million open positions remain unfilled, which could test the market’s complacency regarding easing consumer price pressures. Economists expect the average hourly wage to be 5.3% higher than last year and 0.4% from July.
Central banks around the world, aside from the People’s Bank of China, are also following Powell’s aggressive stance, with European Central Bank’s Francois Villeroy de Galhau calling for a “significant” rate hike in September as the region’s economy flirts. with both an impending energy crisis and the potential for recession.
Recession in Britain is also a growing risk, according to Goldman Sachs economists, who called for a contraction that would begin in the final three months of the year and extend through most of 2023, amid a rise in housing energy costs that are discretionary spending and potentially lead to a consumer debt crisis.
The bleak backdrop for stocks heading into the final week of trading in August is leaving markets behind, with Europe’s Stoxx 600 trading 1.2% lower during afternoon trading in Frankfurt after falling 1. 85% for the MSCI ex-Japan index in Asia and down 2.66% for the Nikkei 225 in Tokyo.
On Wall Street, futures pegged to the S&P 500 point to a 38-point drop in the opening bubble, while those on the Dow Jones Industrial Average are priced at a 265-point downward move. Futures linked to the tech-focused Nasdaq point to a 150-point dip.
In other markets, global oil prices soared higher on Monday, rising in the face of both a surging US dollar and declining growth prospects in the world’s largest economies amid ongoing concerns over OPEC’s production cuts.
Saudi Arabia, the cartel’s most influential member, has hinted at production cuts amid what the energy minister has described as “chaotic” global markets and the imminent addition of Iranian crude oil, which could hit the markets in the coming months. as talks between the US, the EU and Tehran on the future of its nuclear program continue to progress.
The deadly turmoil over the weekend in Libya, a key supply-side OPEC state, added to concerns about short-term disruptions that could keep prices high.
WTI crude futures for October delivery were 16 cents higher at $93.22 a barrel, while Brent contracts for the same month, the global price benchmark, fell 11 cents to trade at $100.88 a barrel.
Bitcoin prices plunged back below $20,000 on Monday after the sustained dollar rally, the spike in government bond yields, both of which put downward pressure on assets like gold and digital currencies, which pay their investors no interest.
Bearish sentiment was also linked to reports that creditors indebted as a result of the collapse of the Mt. Gox crypto exchange in 2014, will begin receiving payments from administrators in Japan, a move that could see 137,000 new bitcoin added to the market — and possibly sold — in the coming weeks.
Bitcoin prices last traded 1.59% higher during Monday’s session at 19,881.70 each.