Constructive Fundamentals, Narrowing Margin for Error
Markets edged higher last week. Nvidia and tech earnings kept the AI spending story intact. But Warsh’s hawkish Jackson Hole tone didn’t do the bulls any favors: yields and rate hike odds both moved up. Net net, we’re still constructive here. Valuations just leave less room for error.
3 Factors to Watch This Week:
1. Jobs & the Fed
Friday’s August jobs report is an important market catalyst, with JOLTS on Tuesday and ADP on Wednesday setting the table. Strong jobs and wage numbers will push yields higher; a softer jobs number gives the Fed stay higher for longer
2. Is Growth Still Healthy?
ISM Manufacturing (Tuesday) and Services (Thursday) will tell us whether the economy is holding up. The sweet spot is growth solid enough to back up earnings, but not so hot that it stokes inflation fears and Fed tightening talk.
3. Rates, Oil & Geopolitics
We’re starting the week digesting Warsh’s hawkish remarks with renewed U.S. Iran tensions and rising oil prices. G20 meetings today and tomorrow are also on the radar, but the focus is if Treasury yields can stabilize.
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