Labor Day, celebrated on the first Monday in September, is a tribute to the American workforce and their achievements. It traces its roots back to the labor movement of the late 19th century, when unions were pushing for better working conditions, fair wages, and reasonable hours. The first Labor Day was observed in 1882 in New York City, thanks to the Central Labor Union, and it became a Federal holiday in 1894. Today, it’s a nationwide celebration marked by parades, picnics, and a long weekend that unofficially signals the end of summer.
But Labor Day is more than just a day off—it’s a recognition of the social and economic progress driven by the labor movement. It’s a reminder of the past struggles workers faced and the ongoing fight for fair treatment. Labor plays a crucial role in our country’s prosperity and development, making this holiday a meaningful nod to the workforce that shapes our economy and society.
“Working for Livin” – Working for a Livin – Huey Lewis and the News
It’s All About Labor Now For The Fed
The Federal Reserve’s job is to keep prices stable and promote maximum employment. Right now, they’re walking a tightrope, trying to lower inflation without causing a big spike in unemployment.
At the Jackson Hole Symposium, Jerome Powell said, “Further cooling in the labor market would be unwelcome.” The problem for Powell and the Fed is that once unemployment starts creeping up, it doesn’t usually stop, and a big jump could trigger a recession.
This past Wednesday, the Conference Board reported better Consumer Confidence, but people are still nervous about the labor market and their ability to find new jobs if they need to.
In the next couple of weeks, we’ll see more inflation data and an important Jobs Report next Friday. With inflation easing and Powell noting it’s on a “sustainable path towards 2.00%,” the Fed is now laser-focused on jobs and the health of the labor market.
Bottom line: Interest rates are improving, and the trend is still working in our favor. If the Jobs Report shows more weakness, it could push the Fed to cut rates by 0.50% in September, which would be good news for the bond market.
Looking Ahead
It’s all about labor. This Friday, the August Jobs Report drops. With the September Fed Meeting just weeks away and a rate cut already priced in, this report could influence the size of the cut and the direction of future cuts. We definitely don’t want to see more unemployment, as Powell put it, “further cooling would be unwelcome.”
Economic Calendar
Mortgage bond prices determine home loan rates. The chart below is a one-year view of the Fannie Mae 30-year 6.0% coupon, where currently closed loans are being packaged. As prices move higher, rates decline, and vice versa.
If you look at the right side of the chart, you can see how prices have steadily improved since April and the trend remains our friend.
Chart: Fannie Mae Mortgage Bond (Friday August 30, 2024)
Economic Calendar for the Week of September 2 – 6
