What is 'Labour Market'

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• Rupee advances, forward premiums climb on dovish Fed outlookThe Indian rupee appreciated to 83.8475 per U.S. dollar after Federal Reserve Chair Jerome Powell's dovish comments suggested a possible rate cut next month. The implied yield on the dollar/rupee 1-year forward premium reached 2.14%, the highest since May 2023. Powell emphasized the labor market's softness and the Fed's confidence in meeting its inflation targets.
• Fed rate cut possibility has moved from if to when to how much, says Ajay BaggaMarket expert Ajay Bagga noted that Fed Chairman Jerome Powell reassured the market by signaling readiness to cut rates due to labor market concerns. With rate cuts almost certain by September, bond yields dropped, stocks rose, the dollar weakened, and gold prices increased. This was expected amid the substantial fiscal deficit buffering economic errors.
• Euro zone business activity gets boost from Olympics, PMI showsEuro zone business activity showed unexpected strength in August, despite firms raising prices. This could weaken expectations for further rate cuts by the European Central Bank. The boost in activity was largely due to the Paris Olympics, offsetting ongoing weakness in manufacturing, particularly in Germany, where business activity contracted more than expected.
• High food inflation could exacerbate inequality: Kaushik Basu"Even if inflation is at 5.1%, food inflation is at 30%. For someone spending 50% of their income on food, that 30% food inflation is hitting them significantly harder despite government programmes like PM Gareeb Kalyan Yojana providing some relief," Basu said at a Delhi School of Economics event to mark its 75 years of existence.
• Global stock market volatility: Worst yet to come?Recent stock market turbulence raises the question of whether the worst is over or yet to come. Despite recent corrections, US and Indian stocks remain overvalued, with Warren Buffett's $182bn cash pile seen as a sign of a near-future crash. The volatility index (VIX) in the US has also increased, suggesting a continued atmosphere of fear.
• Japan's Nikkei rebounds as US jobs data eases slowdown fearsJapan's Nikkei share average saw a 1.7% rise, spurred by a surprising decrease in U.S. unemployment claims which alleviated recession fears. A softer yen also provided relief. This rally aligns with strong performances of U.S. stocks where Nasdaq and S&P 500 both saw over 2% gains. Market volatility earlier in the week was notable.
• Rupee hits record low for third day amid US growth concerns and equity outflowsThe rupee closed at a record low for the third consecutive day due to outflows in Indian equities and risk aversion due to signs of a growth slowdown in the US
• JPMorgan, Citi see two half-point rate cuts this yearAmid signs of a cooling labor market, Wall Street banks have heightened their expectations for aggressive Federal Reserve interest rate cuts. Economists from major banks such as Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase revised their forecasts, predicting more substantial rate reductions starting September 2023 and continuing through mid-2025.
• Too few people paying income tax a structural issue; what can be done to expand tax base? Mitali Nikore answersMitali Nikore discussed the structural issues in India's tax system, highlighting that only the top 10% of income earners pay taxes. She emphasized the need for progressive taxation and suggested focusing on GST to expand the tax net. Nikore also called for reconsidering corporate and small business taxes to ensure broader revenue collection.
• Russia opts for a big rate hike, to consider moreThe Bank of Russia raised its benchmark on Friday to 18% from 16%, in line with most forecasts. In a statement accompanying the decision, policymakers said they "will consider the necessity of a further key rate increase at its upcoming meetings." "For inflation to begin decreasing again, monetary policy needs to be tightened further," the central bank said. "Returning inflation to the target requires considerably tighter monetary conditions than presumed earlier."