The latest labor market data in the US has sparked concern among investors about a slowdown in the economy. While the S&P 500 index initially rose after the release of the data, showing fewer new jobs added in April than expected, there is still worry about the inverted yield curve.
The weaker job growth and increase in unemployment rate suggest a potential economic slowdown. This has led to speculation about a possible interest rate cut by the Federal Reserve in the future. However, Fed Chairman Jerome Powell has indicated that interest rates will remain unchanged for now.
Investors are uncertain about when the Fed might cut interest rates, with some predicting a decrease in September. The financial markets are also concerned about the impact of inflation on stock markets and whether it could lead to an economic downturn.
However, experts like Thomas Stucki from St. Galler Kantonalbank do not see a recession as likely at this point. Despite these uncertainties, investors are advised to adopt a defensive investment strategy and reduce risks in their portfolios.
The Fed’s decisions on interest rates are closely watched, especially in light of upcoming elections. How central banks manage monetary policy could have implications for political landscapes, although Powell has stressed that election campaigns will not influence their decisions.
In Switzerland, while the Swiss National Bank has already made cuts to interest rates, it had little impact on Swiss stocks markets due to factors such as exchange rates and Fed policy playing more significant roles. Stucki expects further interest rate cuts by SNB later this year but emphasizes that uncertainty remains overall.
Overall, despite concerns over job growth and inflation, experts see no imminent recession at this time and advise investors to be cautious with their portfolios while keeping an eye on central bank decisions related to monetary policy.