In a recent appearance on “Bloomberg Surveillance,” BlackRock Portfolio Manager Jeffrey Rosenberg expressed his disappointment with the July payrolls report, describing the data as “disappointingly weak.” Rosenberg emphasized that the Federal Reserve is likely to resist market pressure for a significant rate cut in September, despite expectations for a 50 basis point reduction.
Rosenberg’s analysis highlighted the broader market reaction to the report, noting that the bond market has priced in a 50 basis point cut. He underscored the importance of the upcoming Jackson Hole symposium, where the Fed will need to address market expectations and its monetary policy strategy.
The weak payrolls report, which did not show significant impact from recent hurricanes, contributed to the market’s disappointment. Rosenberg pointed out that the market’s reaction is not limited to bonds but is also evident in the stock market, particularly with the Russell 2000 index leading a downward trend.
Rosenberg acknowledged the shift in market sentiment and the increased focus on the Fed’s response to evolving economic conditions. While he recognized that financial conditions had been supportive, he noted that they can change rapidly, leading to tighter conditions and necessitating a faster policy response.
In response to the possibility of a 50 basis point cut in September, Rosenberg stated that while the market may be pushing for such a move, the Fed is likely to exercise caution. He suggested that the Fed might prefer a more measured approach to avoid overreacting to short-term data fluctuations.
