US economy is slowing but remains solid “Average job growth in the final quarter was actually quite a bit higher than the average in the second quarter. And the July jobs report, which sent shock waves through the market in early August, looks less scary after the revision.” “First, the market reaction was textbook-like: the USD rallied sharply and a 25bp cut was priced out across the curve. The upshot is that interest rate expectations now look much more realistic, i.e.
the market seems to be backing our economists' view that the Fed will cut rates by 25 basis points per meeting at the upcoming meetings, rather than the larger pace of 50 basis points.” “The figures have once again confirmed something crucial: one should simply not over-interpret a single data point from the payrolls at the moment, both in terms of positive and negative surprises. Friday's figure is also likely to be revised several times.