Oil at $90, Jobs Beat, and the Fed’s September Dilemma

Grant Calloway

Futures are trading flat to lower this morning as Wall Street stumbling back to its desks after the long Labor Day weekend. West Texas Intermediate crude is holding firm right around ninety dollars a barrel, fueled by fresh Middle East friction, and that is testing market resilience after Friday's surprise job print. You remember that number, uh, one hundred sixty two thousand nonfarm payrolls added in August, way above expectations, and July got revised up from negative to positive too.

Grant Calloway

Now, stepping back on the floor on a post Labor Day Tuesday, well, that always had a specific smell to it in my specialist days on the big board. The floor would roar back to life, but it was not celebration. It was institutional desks scrambling to re hedge portfolios, panicking about autumn energy spikes and sudden shifts in the short end of the yield curve. That post holiday return brings a cold dose of volume back into a market that spent August pretending crude oil at ninety bucks wouldn't hit corporate bottom lines.

Grant Calloway

Before the opening bell rings at nine thirty Eastern, we are watching earnings from Casey's General Stores, ticker C A S Y. Now, Casey's might sound like just a Midwest convenience chain, but on the floor, we watched it as a pure bellwether. They show us raw fuel margins and whether the heartland consumer is still buying gas and gas station pizza, or if higher pump prices are squeezing discretionary spend. Combine that with broader pressure in industrial equities, and you get a real look at economic health.

Grant Calloway

And, uh, before we move to the central bank drama, if you want to streamline your morning market prep before the four hundred milliseconds of capitalism kicks off at nine thirty, head over to jellypod.com to build your custom daily routine.

Grant Calloway

That brings us straight to the big debate hanging over the market ahead of the September fifteen to sixteen Federal Reserve meeting. Right now, traders in the fed funds futures market, according to the C M E FedWatch tool, are pricing in a fifty eight point four percent chance of a twenty five basis point rate hike this month. The hawkish camp is banging the drum that elevated crude and diesel prices are not staying isolated in energy, but are creeping into transportation and retail supply chains, generating second round inflation.

Grant Calloway

But, uh, let us take a breath before we join the rate hike stampede. The bear case for a hold is very simple: do not bet the farm on a single monthly nonfarm payrolls report. We have seen the Bureau of Labor Statistics rewrite history month after month. Look back at April, where an initial print got bumped up by sixty four thousand, only to get slashed by thirty one thousand in subsequent revisions down the road. Fed Governor Christopher Waller signaled last week that waiting for hard inflation data beats knee jerk policy changes based on preliminary labor data.

Grant Calloway

So the real truth lands later this week. Mark your screens for Thursday at eight thirty a.m. Eastern when we get the August Producer Price Index, followed immediately on Friday at eight thirty a.m. Eastern by the August Consumer Price Index. Those two prints will settle whether the Fed hikes or stands pat. As an old trading desk saying goes, autumn markets will test your convictions, but November will take your shirt if you trade on assumptions.

Grant Calloway

Quick reminder, this broadcast is strictly for educational and informational purposes and does not constitute investment advice or a solicitation to buy or sell any security. Have a sharp morning, and I will see you on the tape.