The Fed and non-farm payrolls keep markets on edge

As we approach May 2024, the economic landscape in the first week of the month is marked by two significant events that have investors very attentive.

On Wednesday, May 1, 2024, all eyes will turn to any indications that the United States Federal Reserve (Fed) may offer regarding its plans regarding interest rates for the current year.

Jerome Powell, Chairman of the Fed, has hinted that any rate cuts will depend on the evolution of inflation, which has not yet reached the 2% target.

Recently released inflation data for March 2024 remained in line with expectations, which did not significantly alter the market’s perception regarding a possible rate cut in September.

However, expectations of cuts have gradually waned as economic indicators, such as the labor market and inflation, show surprises to the upside. Initially, a cut was expected in March, but this expectation has been pushed back to June and September.

On the other hand, the monthly employment report, Non-Farm Payrolls (April 2024), published on Friday, May 3, 2024, will offer a fresh assessment of the health of the US labor market.

It is estimated that around 243,000 jobs were created in April, slightly lower than the 303,000 recorded in March. At the same time, the unemployment rate is expected to remain steady at 3.8%, according to analysts’ projections.

In this context, observing how these economic events will impact the Fed’s decisions and market perception is crucial. A strong labor market and controlled inflation could boost the Fed’s confidence in the economy, influencing its interest rate decisions. However, any significant deviation from expectations could generate volatility in financial markets.

In summary, these early days of May 2024 promise to be intense for investors, with attention focused on the Fed’s actions and critical labor market data. Uncertainty regarding future economic decisions and how these events unfold could significantly affect global markets and the economy.