Bank of America: Expects August Nonfarm Payrolls to Add Only 40,000 Jobs, Far Below Market Consensus; September Federal Reserve Rate Hike Hinges on CPI
Bank of America, in its latest report published on September 2, projected that August non-farm payrolls would increase by only 40,000 (35,000 in the private sector), significantly below market consensus, with the unemployment rate remaining at 4.1%. The bank emphasized that Federal Reserve Chairman Warsh's speech at the Jackson Hole Economic Symposium clearly indicated that inflation is the core anchor of current monetary policy. Therefore, the true hurdle for a September Fed rate hike lies in the upcoming CPI inflation data, rather than the non-farm payrolls report. Based on the asymmetric risks of the non-farm data, Bank of America recommends investors go long on 5-year U.S. Treasuries, construct a 5-year/30-year U.S. Treasury yield curve steepener trade, and tactically short the U.S. dollar.
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