- Treasury yields jumped after a two-day decline at the beginning of the week, due to sentiment over future interest rate hikes and stock futures. This follows from the Bureau of Labor Statistics announcement, that August experienced over 1 million fewer job openings than anticipated, reflecting a narrowing labor gap.
- High demand for workers has led to increasing salaries, driving up inflation, which might potentially change the future of the Federal Reserve Policy. As central banks continue to increase interest rates to fight against inflation, investors have expressed concerns about a possible recession and that the hikes are being implemented too quickly. Analysts are now saying that the new labor market data could make the Fed slow down rate hikes.
Why it matters
Investors are worried about a recession as the Fed has continued to raise interest rates. Major US stocks dived on Wednesday after rallying at the start of the week. Even more, they are concerned that with fewer job openings, the labor gap is shrinking. If the Fed was to take one lesson from this, it might be to reduce interest hikes as the labor gap seems to have been allayed.