All eyes will be on the August unemployment report due out tomorrow. This report is generally viewed as the most important set of economic statistics every month. This will be especially true this month since it will be the last jobs report before the Fed meeting. Most economists feel that tomorrow s report will show some moderation in wage growth. Labor costs are significant, to Alan Greenspan, because they account for more than two-thirds of most companies total costs.
Longer rates are a result of buying and selling by participants in the bond markets.
Therefore, perception becomes reality. If the market perception is that inflation is under control, this hard rate will shrink to more traditional levels, causing long-term interest rates to decline and bond prices to rise. We think the Fed, irrespective of tomorrow s report, will tighten by another point in October. This means that the next few months should provide terrific buying opportunities for the long-term bond investor. E-mail the author.