Too Strong for the Fed
What is it?
Jobs data came out last week that may be too strong for what the Fed had initially planned.
“A blowout U.S. jobs report on Friday sparked a delayed rally on Wall Street as the data revealed a strong economy with moderating inflation that helped set aside fears of higher interest rates that caused bond yields to soar. September’s job numbers were almost double the 170,000 forecast of economists polled by Reuters and shocked a market trying to understand how the U.S. Federal Reserve will address a strong economy and its mission to lower rates to its 2% target.”*
Why does it matter?
While that is good news for the prior month it may not be ideal for the months to come. Since employment is strong the Fed may keep interest rates high or even push them higher to tame inflation. If so, stocks will have to overcome elevated interest rates which may lower stock prices.
Because of what’s going on, we are slightly reducing our exposure to the stock market. However, the main portions of our portfolios are not changing much as of now.
Other articles we found interesting this week:
Current 401(k) portfolio
Our last 401(k) portfolio reallocation: 8/14/2023.
Want more information?
The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
*Herbert Lash. “Stocks rally, bond yields soar on blowout US jobs data”. Reuters. 10/6/2023. https://www.reuters.com/markets/global-markets-wrapup-1pix-2023-10-06/
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