Fed's 'higher-for-longer' rate expectations rise as jobs and spending stay resilient

BlockBeats news, September 27 - Bloomberg and Reuters surveys show that economists expect U.S. nonfarm payrolls to increase by approximately 90,000 and 100,000 in September, respectively, with the unemployment rate holding steady between 4.1% and 4.2%.

Meanwhile, Bloomberg expects U.S. real personal consumption expenditures to rise 0.5% month-over-month in August, which if realized would mark the largest increase in over a year. The continued resilience in employment and consumption indicates that demand in the U.S. economy has not yet cooled significantly, providing support for the Federal Reserve to maintain its tightening policy.

Inflationary pressure remains the primary constraint facing the Federal Reserve. The market expects that both headline and core PCE month-over-month growth may accelerate in August, while the core PCE year-over-year rate previously remained at 3.3%, above the Fed's long-term target of 2%. The Fed raised rates by 25 basis points this month, its first rate hike in three years, and signaled the possibility of further rate increases within the year. Currently, market expectations for another 25 basis point rate hike in October are rising.

As U.S. Treasury yields remain elevated, pressures on corporate financing, housing, and highly valued assets are also accumulating. Next week's releases of job openings, PCE, ISM manufacturing, and nonfarm payrolls data will become key factors influencing expectations for the Fed's subsequent rate path.