There's also concern the Fed will move toward a tightening bias, perhaps as soon as this month. |
There's still a chance of a rate hike, you can never officially rule that out, but for the moment it appears the worst-case scenario will be an announcement of a tightening bias. I don't see that happening, but that would be the worst-case scenario. |
There's still a lot of consumer demand out there, and as businesses try to restock their inventory levels they will increase demand, which will lead to stronger growth. That could be problematic for the Fed. |
What the Fed may do right now is prepare the market for a switch to a tightening policy from a neutral policy, and that may happen as soon as this month. There's always been the expectation that the economy would slow and ease labor market conditions, but that doesn't seem to be happening. |
What's important to keep in mind is that we really only have one month of numbers that confirm the economy is slowing. What the markets want to see is more evidence of a slowdown, which is why this report is important. |