Labor Day Lulls & Market Moods
What Happened This Week?
Quiet Beginnings: With most markets closed for Labor Day, trading kicked off slower than usual.
Fewer Trades, Thinner Liquidity: Even the markets that opened felt lighter, especially in the FX arena.
Japanese Yen’s Wiggling: USD/JPY dipped past the 147 mark, showing a quirky swing without any clear news behind it.
Soft Signals from the AUD & NZD: Both currencies lost footing overnight, partly blamed on a 3 % drop in iron‑ore prices—though the link isn’t solid these days.
The Big Themes
September’s Reputation: Historically, September has been the toughest month for the S&P 500 in the past five years.
Economic & Earnings Bounce: Q2 earnings spiked 10.9 % YoY—the fastest since late 2021.
Fed’s Playlist: Opinions bubble around whether the Fed will cut rates by 25 bp or 50 bp in September.
The “Fed Put” Effect: Investors stay bold, diving into equity dips because they know the Fed has plenty of leeway to rescue the market if needed.
“No extra cooling of the labor market anticipated,” Powell quipped at Jackson Hole, giving the market an extra safety net.
Looking Ahead
ISM Manufacturing PMI (US): Expected to tick up to 47.5, hinting at a brief pause in the sector’s contraction.
Swiss CPI: Likely to stay near the bottom of SNB’s target range, paving the way for another 25 bp cut later this month.
European Central Figures: BoE Deputy Gov Breeden and ECB’s Nagel will speak today, but no major policy surprises are expected.
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Quick Tip: The market’s current choreography suggests that the path of least resistance still favors upticks in equities—as long as the FOMC maintains an easing bias. Stay tuned, keep those charts handy, and enjoy the ride!
