Hawks Circle As Fed Stern On Higher Interest Rates


Simpler Trading Team

2 min read

In this article:

  • Central bankers lock arms in Fed stance
  • Numbers for job openings higher, again
  • Harder landing expected for economy

Three is not a lucky number in the stock market today.

Stock market losses mounted Tuesday as all three major indexes sold off heavily for the third day in a row.

Market anxiety was rampant following the release of higher job openings data and central bankers showing no signs of lowering interest rates.

Fed holds to higher interest rate plans

The hawks are circling.

Central bankers have locked in support of Federal Reserve (Fed) Chairman Jerome Powell’s hawkish stance on Friday saying the Fed is committed to higher benchmark interest rates.

Minneapolis Fed President Neel Kashkari told Bloomberg news he was ”happy” with how the market responded to Powell’s remarks. He was pleased his Fed colleagues were showing the seriousness of confronting 40-year high inflation with hawkish monetary policy.

He was joined by fellow Fed President John Williams of New York who stated in a Wall Street Journal live interview Tuesday the expectation of a protracted time frame for battling inflation.

Simpler’s traders noted a concerning comment in Powell’s speech regarding restoring price stability. This is expected to require maintaining a restrictive Fed fiscal policy for the near future.

The Fed has made clear it wants to continue raising interest rates, slow economic growth, and soften the labor market. This increases fears of harsh stock market and economic conditions in Fed efforts with the likelihood of a harder “corrective” landing.

Stock market gets a jolt from jobs

The stock market didn’t get any brighter news with the latest release of economic data.

U.S. Job Openings and Labor Turnover Survey (JOLTS) numbers released today didn’t provide any boost in the stock market.

The U.S. Bureau of Labor Statistics reported that “job openings changed little at 11.2 million on the last business day of July. Hires and total separations also changed little at 6.4 million and 5.9 million, respectively.”

Openings are slightly higher than the previous month at 11 million. By contrast, there were 7 million job openings in the month before the pandemic hit in March 2020.

The next report that could influence the stock market – JOLTS data for August – is scheduled to be released Oct. 4.

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