John Hancock: Weekly Market Recap Week Ended August 25

Rising yields

The potential for further rate hikes sent short-term U.S. Treasury bond yields higher, as the 2-year yield jumped on Friday to around 5.06%, roughly equal to a year-to-date high reached on March 8. The last time the 2-year yield remained above 5.00% for an extended period was in mid-2000.

Fed’s cautious message

U.S. Federal Reserve Chair Jerome Powell said on Friday that the Fed is prepared to approve further interest-rate increases at some point but will “proceed carefully.” Speaking in Jackson Hole, Wyoming, Powell cautioned that past increases haven’t yet fully cycled through the economy, and he indicated the Fed will await further economic data as it decides on the timing of any further hikes.

Economic red flags?

A pair of reports indicated a slowdown in U.S. economic activity. Stocks fell on Thursday after data showed that new orders for durable goods fell 5.2% in July to post the biggest monthly decline in more than three years. On Wednesday, a separate report showed business activity fell to a six-month low.

Jobs ahead

A monthly U.S. labor market update due out on Friday will show whether the modest jobs growth slowdown in recent months extended into August. In July, the economy generated 187,000 new jobs, short of most economists’ expectations and roughly in line with June’s gain. July’s unemployment rate slipped to 3.5%.

Source: https://www.jhinvestments.com/weekly-market-recap#market-moving-news