Sharp 818K Downward Payroll Revision From the QCEW

The largest payrolls revision since the GFC…

Highlights

• The largest payrolls revision since the GFC…

• … dovish minutes from the Fed’s July meeting…

• … and a “trading-down” consumer all make a 50 bp September cut a possibility

• Plus, some lessons from history on corporate tax increases

While We Were Sleeping

In the overnight trade, we are pretty well in the same spot we were in yesterday. U.S. equity futures are slightly in the green column; Europe has turned in a fractional +0.2% gain thus far; and Asia, for the most part, closed higher (China is the exception with the Shanghai Composite off -0.3%): Hong Kong is up +1.4%, Japan’s Nikkei 225 +0.7%, Singapore +0.4%, India +0.2%, and Korea +0.2%. There are emerging signs that the BoJ is not going to touch interest rates again until 2025Q1 at the earliest, so… the proclamation of the death of the yen-carry trade may well have been premature (we will be hosting Nomura’s legendary chief economist, Richard Koo, on August 29th at 9:00 a.m. ET to clear the air for us regarding this issue).

Very quietly, Australian equities have turned in ten consecutive winning sessions in the longest positive stretch since February 2015, and approaching fresh record highs in the process — even with a squishy-soft Chinese economy and a central bank that has been stubbornly hawkish (the S&P/ASX 200 composite added +0.2% today). Bond markets are little changed but have a slight upward yield bias, at the margin — though only after the 10-year T-note closed yesterday at its lowest level since July 2023 at 3.78% (and is down nearly -15 basis points in just the past four sessions).