On September 12, the Labor Department reported that 2,000 more Americans filed for unemployment benefits. The total is now 230,000. Continuing claims are now at 1.85 million. The data aligns with an earlier report where the unemployment rate in August fell slightly from July.
The Producer Price Index increased by 0.1% last month and is up by 1.7% in the last 12 months. Although this is the smallest rise in six months, markets should expect the Federal Reserve to cut rates by 25 bps at most next week.
Bond markets continue to price several rate cuts in the year ahead. The 20+ Treasury Bond ETF (TLT) is 21.89% above its 52-week low. However, TLT stock might peak at between $100 – $110. The debt market expects only small rate cuts at every Fed meeting in the next few months.
Service inflation of 0.4% caused the PPI to rise in August. Hotel and motel room prices increased by 4.8%. Investors may bet that travel and lodging activities will continue. That is bullish for Marriott International (MAR) and Hilton Worldwide (HLT). This is not bullish for Airbnb (ABNB). That travel service competes with hotel services. When hotels offer better accommodations, ABNB stock will underperform.
