Inflation is transforming Wall Street’s thinking about Biden’s economy – By Victoria Guida (Politico) / Oct 6, 2023
Markets have been roiled for weeks as reports have underscored the economy’s resilience.
President Joe Biden is hoping the economy continues to thrive through the election year. But Wall Street investors shudder each time they hear good news.
Markets have been roiled for weeks as reports have underscored the economy’s resilience. While faster growth usually boosts stocks, in the upside-down world created by high inflation, many investors see it as a sign the Federal Reserve is likely to maintain its punishingly high interest rates longer. The bond market is also not immune: A favorable report on job openings this week drove investors to push up rates on long-term U.S. government debt to heights not seen since before the 2008 financial crisis.
That’s why Friday’s explosive report on September employment has taken on greater-than-usual significance. The Labor Department said the economy added 336,000 jobs during the month — nearly double the 170,000 that many forecasters had anticipated. That could further stoke expectations that the central bank will keep rates high throughout next year as Fed Chair Jerome Powell has signaled.
“We’re all at the mercy of each incoming data point,” said Liz Ann Sonders, chief investment strategist at Charles Schwab.
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