It’s time for the Federal Reserve to cut interest rates. A recent string of weak labor market data has all but cemented a rate cut at the Federal Open Market Committee’s (FOMC) September meeting, despite stubbornly persistent inflation. Weakness in the labor market is becoming more widespread. Private equity is stuck and in debt. Be careful with relative valuations. ARMs are making a comeback.
1. Markets are now pricing in six rate cuts by the end of 2026 and, notably, the implied rate at the end of 2026 is below the Federal Reserve’s current estimate of the long-term neutral rate:
Source: Bloomberg
2. Following the final monthly revision, June was the first month with negative payrolls growth since 2020:
Source: @TheStalwart
3. Healthcare and social assistance have been the largest sources of job growth in recent months:
Source: @byHeatherLong
4. The last couple of years have been difficult for young software developers, but I don’t believe AI has been a major factor until recently:
Source: Walter Frick, Bloomberg Weekend
5. Construction employment, a surprising bright spot in recent years despite higher rates, has slowed materially:
Source: @JosephPolitano
6. The labor market is unlikely to be a source of inflation at this point in time:
Source: @byHeatherLong
7. Utility cost increases are offsetting the slowdown in housing inflation:
Source: @stevehou0 via the Daily Chartbook on 8/29/2025
8. There’s a lot of money tied up in private equity and there’s not a clear path to liquidity:
Source: @verdadcap
9. Non-U.S. equities may be inexpensive on a relative basis but none of the major regions look like a screaming value on the surface:
Source: Goldman Sachs, @mikezaccardi via the Daily Chartbook on 9/3/2025
10. A steepening yield curve makes ARMs look relatively attractive:
Source: @RickPalaciosJr
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