Tatler-Cox: US Jobs Report Provides Little Clarity On Rate Hike

Tatler-Cox: The September jobs report did little to provide any further clues as to the likelihood of a rate increase in December.
Tatler Cox: The US economy created 156,000 in September compared to consensus estimates for a 172,000 read and, in doing so, did little to provide clarity as to the prospect of a 25 basis points increase in US interest rates when the US Federal Reserve meets for its final meeting of 2016 in December.
The minor miss saw equity markets trade sideways but yields on the 10-year US treasury not rose above 1.7% as investors speculated that the worse-than-expected number would not be enough to stay the Fed's hand come December.
Part-time and service sector jobs formed the bulk of the increase in positions but the unemployment rate crept up to 5% as more Americans came back into the workforce lending weight to suggestions that there is still slack in the jobs market.
"The number isn't good and it isn't bad but it doesn't make a December rate hike a sure thing," said Mayla Yakumi, chief investment officer at Tatler-Cox.
"There's plenty of economic data to come before now and the December meeting and we think the fed is looking for reasons to hold off despite their assertions to the contrary," added Yakumi.
The US economy has struggled to grow since emerging from a recession in 2009 despite record amounts of monetary stimulus applied by the Federal Reserve. Concerns continue to mount over the kind of jobs being created with many new positions falling into categories that are not as well paid as those in the manufacturing and energy sectors, both of which have suffered heavy declines in recent years.
Tatler-Cox said it believes there is a 50:50 chance of rate hike coming in December but it continues to advise clients to remain invested in precious metals and emerging market stocks which it believes have already priced in a rate hike.