Wall Street retains its breath before the US employment report in September

In the United States, the employment report expected this Friday, September 5, could seal the fate of interest rates. The markets, carried by the hope of a monetary easing, scrutinize the slightest sign of weakness. However, the equation remains fragile: a slowdown sufficient to justify a drop in rates, without reviving the fear of a clear withdrawal of the economy.

An lull on employment which feeds bets on a monetary softening

The latest publication of the employment report in the United States has constituted an inflection point for market anticipations, contrary to the progression recorded after the publication of figures on July inflation. The month of July recorded only 73,000 non -agricultural jobs, a figure significantly lower than forecasts. This judgment, reinforced by lower data revisions of May and June, was perceived by investors as the tangible sign of a weakening of the labor market.

This dynamic strengthens the expectations of lower rates on the share of the federal reserve. “The American job market has slowed down”,, observed Alex Grassino, chief economist at Manulife Investment Management, stressing that the components of the next report, including the unemployment rate and time wages, should send the same message.

As the August report approached, expected this Friday, September 5, the market anticipates confirmation of this slowdown. The expected data and the comments of market players point to a reinforced monetary support scenario:

• 75,000 job creations are expected for the month of August, a low figure historically, especially in non -recessive period;
• Fed Futures now count 89 % over a drop in rate of 25 basic points from the next Fed meeting on September 16 and 17.

For Jack Janasiewicz, strategist at Natixis IM, “Lower rates probably prevail over a labor market moderately with withdrawal. This would put a floor under the economy … and the stock market ”.

Drew Matus (Metlife Investment Management) specifies “That it would take a very strong positive surprise for the Fed to give up lowering its rates”before adding: “The chances that it happens are quite weak”.

The consensus is therefore formed around a scenario in which a continuation of the slowdown in employment would offer the Fed the room for maneuver necessary to start a series of rate reductions.

However, this strategy, although expected, is based on a delicate balance between support for the economy and controlling persistent inflationary tensions.

Contradictory signals

In parallel with economic data, the financial markets continue to evolve in a contradictory dynamic. The S&P 500 increased by 1.9 % in August, despite a historically difficult month for American actions.

“Over the past 35 years, September is on average the worst month for the S&P, with a drop of 0.8 %”recalls the Stock Trader's Almanac. This unexpected summer performance is partly explained by the enthusiasm of investors around the prospects related to artificial intelligence, although technological values ​​have shown signs of weakness at the end of the month, in particular with anticipations around Broadcom's results.

Beyond market dynamics, an institutional factor weighs on anticipations. Donald Trump's attempt to revoke the Fed governor Lisa Cook, has rekindled fears about the independence of the Central Bank. Cook brought the case to court, arguing that the president does not have the power to dismiss it.

“Many things that market players have taken for granted are today called into question”warns Grassino. This climate feeds latent volatility, while the positioning of the Fed also becomes a subject of political speculation.

In this uncertain context, Bitcoin and the main cryptos could draw out of the game. A softening confirmed by the Fed would strengthen the attractiveness of alternative assets, in particular cryptos, because of their partial decorrelation of traditional markets.

The convergence between these institutional tensions and the economic situation therefore feeds structural uncertainty. In the short term, a figure of employment in accordance with expectations or slightly lower could reinforce the flexible trajectory of the Fed. If the rates drop, as Goldman Sachs forecast, it will be as much in response to an economic reality as to an institutional environment under pressure.