Unexpectedly Weak Employment Report
The nuclear test by North Korea has brought geopolitical uncertainty to a new level. As I have previously written, it is very hard to trade geopolitical risk so I prefer to stay focused on fundamentals.
Last week’s August employment report was weaker than expectations on almost all aspects. The report comes after stronger employment data earlier in the week. The ramifications of the weaker report bring the odds of a December interest rate increase by the Federal Reserve (Fed) to less than 50/50. The weaker average hourly earnings and sluggish inflation data may keep the Fed on hold until after the holiday spending season.
Pay attention to the level of the 10-year Treasury as it approaches lows for the year. Also, look out for the flattening of the yield curve as a warning sign for economic conditions going forward.
Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice. The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete. Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements. Actual results may differ significantly. Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.
Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.
High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.
All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.
Copyright © 2015 Penn Mutual. All Rights Reserved. All trademarks are the property of their respective owners.Read Less...