Relentless rally pauses for breath By Reuters

A Look at the Day Ahead in US and Global Markets by Samuel Indyk

The relentless rally since early August finally took a break on Tuesday after eight straight days, and futures are not giving much indication of where to go on Wednesday.

The U.S. benchmark fell 0.2 percent, almost a dramatic decline, but a decline nonetheless. It was the index’s first day of decline since August 7.

floated unchanged on Wednesday, as did the Nasdaq and Dow Jones.

The bearish upside momentum comes as markets turn their attention to US jobs data, this time benchmark revisions to non-farm payrolls, which could point to a weaker labor market than previously thought.

But as Deutsche Bank notes, the revisions only affect numbers up to the March payrolls and do not cover job gains since then.

Remember, July’s lackluster jobs report helped send global stocks into a tailspin on fears that the US economy was headed for a recession.

Markets have moved quickly to price in a faster pace of easing from the Fed this year and are still on track for nearly 100 bps of rate cuts through the end of 2024.

With just three meetings left, that implies two quarter-point cuts and a 50bps move, a much more aggressive pace than expected at the start of the month.

By contrast, a slim majority of economists polled by Reuters think the Fed will cut rates by 25 bps at each of its three remaining meetings this year, while just 11% of those surveyed expected the Fed to cut by 100 bps or more.

Clues on the path for interest rates could come later when the Fed releases minutes from its July meeting, when rates were held at 5.25%-5.5%.

Policymakers have been tight-lipped about whether a major move might be possible, but in an interview with The Associated Press on Monday, Atlanta Fed President Raphael Bostic appeared to be preparing markets for a more aggressive path to lower rates.

“Evidence of accelerating weakness in the labor markets could justify a faster move, either in terms of the growth of the movement or the speed at which we try to turn around,” Bostic said on Monday, referring to the level of rates that would not be restrictive . .

Fed Chairman Jerome Powell will be able to give his views on interest rates on Friday when he speaks at the Fed’s annual meeting in Kansas City in Jackson Hole, Wyoming.

As inflation cools and the labor market looks rocky, Powell could use his platform to signal that the markets are right about how quickly borrowing costs can be cut.

For now, the markets are in wait-and-see mode. European shares are up slightly, the dollar is up a bit, but only after hitting its lowest level since January earlier in the day. Benchmark Treasury yields are little changed.

Key developments that should provide more direction for US markets later on Wednesday:

* Benchmark revisions of US non-farm payrolls

* FOMC minutes

* The US will sell $16 billion worth of 20-year bonds

* Earnings from Target, Analog devices (NASDAQ: ), TJX (NYSE: