LPL Research strategists Ryan Detrick and Lawrence Gallium analyze the recent weakening economic data and what it means for Federal Reserve Bank (Fed) policy, while also looking at global central bank policy. They also consider what could be in store for stocks and bonds the rest of 2021.
Weak Jobs Report and Economic Data
Ryan noted the August nonfarm payrolls missed estimates by nearly 500k, while other recent economic data has been weak as well. Specifically, he noted a historic drop in Consumer Confidence. But what does it mean though? Clearly, the Delta variant is impacting things, but Ryan’s view is that any slowdown in Q3 will be made up in Q4. Given stocks were flat on the day suggests markets weren’t worried. Lawrence points out that this does little to change or alter Fed policy, and in fact, it could push back tapering—which could mean we are back to a “bad news is good news” world.
Central Bank Roundup
Lawrence points out that Central Bank balance sheets have increased by $10 trillion since the pandemic started. Although he sees the pace of balance sheet expansion slowing, it is clear that accommodative central banks are here to stay for the meantime. September is also a huge month, with a Fed meeting, along with Bank of Japan and European Central Bank (ECB) meetings. With the Delta variant concerns, we would continue to expect dovish central banks and more accommodative policies.
Tune in now
Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the US and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunes, Google Podcasts, or Spotify and find us on the LPL Research YouTube channel.
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All index data is from FactSet.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
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