September Jobs Report Could Give Stock and Bond Markets an October Surprise
Payroll figures reveal if the Fed is ahead of the curve or behind it. The U.S. September payroll report, slated for Friday, could set the tone for the stock market. Is the U.S. Federal Reserve behind the curve?It's been two weeks since the Fed's decision to cut U.S. interest rates by a half-point, and that's a decent interval to assess the financial market's reaction.Investors should be aware of one crucial detail about market psychology. Even as the Fed offered a "commitment not to fall behind the curve" as a way of explaining its decision process, there's a widening gulf between equity market and fixed-income market expectations.It has become clear from Fed Chair Jerome Powell's remarks at the post-FOMC press conference that the Fed has shifted its focus from its price-stability mandate to its maximum employment mandate, especially in light of the tamer-than-expected August PCE report. What happens if the jobs market significantly deteriorates?