Evelyn Reynolds

A trader signals an offer in the Standard & Poor’s 500 stock index futures pit at the CME Group in Chicago on Dec. 14, 2010.
Scott Olson | Getty Images News | Getty Images

The relationship between the 10- and 2-year Treasury yield briefly normalized Wednesday, reversing a classic recession indicator.
Following economic news that showed a sharp decline in job openings and dovish remarks from Atlanta Fed President Raphael Bostic, the benchmark 10-year yield inched above the 2-year for the first time since June 2022.

The respective yields were both around 3.79% on the session, with just a few thousandths of a percentage point separating them.

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10-year yield vs. the 2-year

An inverted yield curve, in which the nearer-duration yield is higher, has signaled most recessions since World War II. The reason why shorter-duration yields rose above their longer-duration counterparts is essentially the result of traders pricing in slower growth out into the future.
However, a normalization of the curve does not necessary signal good times ahead. In fact, the curve usually does revert before a recession hits, meaning the U.S. could still be in for some rough economic waters ahead.
“If you don’t have any sense of history regarding the economy, needless to say it would be positive,” said Quincy Krosby, chief global strategist at LPL Financial. “However, statistically the yield curve will normalize as the economy actually does go into a recession or is in a recession simply because the Fed is going to be cutting rates” in response to a slowing economy.
The price action followed a Labor Department report showing that job openings unexpectedly slid below 7.7 million in July, bringing supply and demand almost even following a severe imbalance since the Covid crisis. Job openings had exceeded labor supply by more than 2 to 1 at one point, aggravating inflation that had been at its highest level in more than 40 years.

At the same time, Atlanta Federal Reserve President Raphael Bostic released comments, around the same time the job openings report dropped, indicating that he’s ready to start reducing rates even with inflation running above the central bank’s 2% goal.
Lower rates are seen as a boost for economic growth; the Fed has held its benchmark rate at its highest level in 23 years since July 2023, targeted in a range between 5.25%-5.5%.
While the market most closely watches the relationship between the 2-year and 10-year, the Fed more closely observes the relationship between the 3-month and 10-year. That part of the curve is still steeply inverted, with the difference now at more than 1.3 percentage points.

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Job openings slumped to their lowest level in 3½ years in July, the Labor Department reported Wednesday in another sign of slack in the labor market.
The department’s closely watched Job Openings and Labor Turnover Survey showed that available positions fell to 7.67 million on the month, off 237,000 from June’s downwardly revised number and the lowest level since January 2021.

Economists surveyed by Dow Jones had been looking for 8.1 million.
With the decline, it brought the ratio of job openings per available worker down to less than 1.1, about half where it was from its peak of more than 2 to 1 in early 2022.
The data likely provides further ammunition to Federal Reserve officials who are widely expected to begin lowering interest rates when they meet for their next policy meeting on Sept. 17-18. Fed officials watch the JOLTS report closely as an indicator of labor market strength.
“The labor market is no longer cooling down to its pre-pandemic temperature, it’s dropped past it,” said Nick Bunker, head of economic research at the Indeed Hiring Lab. “Nobody, and certainly not policymakers at the Federal Reserve, should want the labor market to get any cooler at this point.”
While the job openings level declined, layoffs increased to 1.76 million, up 202,000 from June. Total separations jumped by 336,000, pushing the separations rate as a share of the labor force up to 3.4%. However, hires rose as well, up 273,000 on the month, putting the rate at 3.5% or 0.2 percentage point better than June.

The professional and business services sector showed the biggest increase in openings with 178,000. On the down side, private education and health services fell by 196,000, trade, transportation and utilities declined 157,000 and government, a leading source of job gains over the past few years, was off by 92,000.
Though the report adds to concerns that the economy is slowing, it “does not suggest any rapid deterioration in the labor market,” Krishna Guha, head of the Global Policy and Central Bank Strategy Team at Evercore ISI, said in a client note.
“The still low level of layoffs and tick up in hires suggests the labor market is not cracking. But demand for workers continues to soften relative to the supply of workers, and a forward perspective suggests this is likely to continue under restrictive policy,” he added.
The report comes two days ahead of the pivotal August nonfarm payrolls count that the Labor Department will release Friday. The report is expected to show an increase of 161,000 and a tick down in the unemployment rate to 4.2%.

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Atlanta Fed President Raphael Bostic signaled Wednesday that he is ready to start lowering interest rates even though inflation is still running above the central bank’s target.
The comments come with markets already widely expecting the Fed to cut its benchmark borrowing rate by at least a quarter percentage point when it meets Sept. 17-18.

speaking at Jackson Hole on August 23, 2024.  
David A. Grogan | CNBC

Atlanta Federal Reserve President Raphael Bostic signaled Wednesday that he is ready to start lowering interest rates even though inflation is still running above the central bank’s target.
Previously one of the more hawkish policymakers, or in favor of tighter policy to fight inflation, Bostic noted that his focus is shifting more toward the employment side of the Fed’s mandate as signs increase of labor market softening.

“I believe we cannot wait until inflation has actually fallen all the way to 2 percent to begin removing restriction because that would risk labor market disruptions that could inflict unnecessary pain and suffering,” he wrote in a message posted on the Atlanta Fed’s website.
The Fed’s preferred measure showed inflation running at a 2.5% rate in July, and just a slightly higher 2.6% core rate when excluding food and energy. Bostic did not specify how much or when he thinks the Fed should start easing.
However, the missive comes with markets already widely expecting the central bank’s Federal Open Market Committee to cut its benchmark borrowing rate by at least a quarter percentage point when it meets Sept. 17-18.
As an FOMC voting member this year, Bostic’s views carry extra weight and add another level of assurance that the Fed will enact its first easing since the emergency measures it took more than four years ago in the early days of the Covid crisis.
His comments also come two days before what is expected to be a pivotal nonfarm payrolls report as most economists see the labor market losing momentum. Bostic said his experiences with business leaders in the Atlanta area reflect that concern.

“Rest assured, I do not sense a looming crash or panic among business contacts. However, the data and our grassroots feedback describe an economy and labor market losing momentum,” he said. “The upside to this is that the slowdown in activity is feeding a continuing, welcome decline in the pace of inflation.”
Indeed, he cited multiple factors indicating that inflation is progressing convincingly back to the Fed’s target as the labor market moderates.
“Given the circumstances before us — eroding pricing power and a cooling labor market — I’ve rebalanced my focus toward both sides of the dual mandate for the first time since early 2021,” he said.

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The ISM monthly survey of purchasing managers showed that just 47.2% reported expansion in August, above the July reading but below the consensus forecast.
Another weak economic reading raises the probability the Fed will be cutting interest rates by at least a quarter percentage point later this month.

Workers assemble second-generation R1 vehicles at electric auto maker Rivian’s manufacturing facility in Normal, Illinois, U.S. June 21, 2024. 
Joel Angel Juarez | Reuters

U.S. factories remained in slowdown mode in August, fueling fears about where the economy is headed, according to separate manufacturing gauges.
The Institute for Supply Management monthly survey of purchasing managers showed that just 47.2% reported expansion during the month, below the 50% breakeven point for activity.

Though that was slightly above the 46.8% recorded for July, it was below the Dow Jones consensus call for 47.9%.
“While still in contraction territory, U.S. manufacturing activity contracted slower compared to last month. Demand continues to be weak, output declined, and inputs stayed accommodative,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.
“Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and election uncertainty,” he added.
While the index level suggests contraction in the manufacturing sector, Fiore pointed out that any reading above 42.5% generally points to expansion across the broader economy.
It was a weaker-than-expected reading last month that sent markets further into a tailspin, ultimately costing the S&P 500 about 8.5% before recovering most of the losses. Stocks added to declines following the latest ISM release on Tuesday, with the Dow Jones Industrial Average off nearly 500 points.

Another weak economic reading raises the probability the Federal Reserve will be cutting interest rates by at least a quarter percentage point later this month. Following the ISM report, traders raised the odds of a more aggressive half-point reduction to 39%, according to the CME Group’s FedWatch measure.
With the survey, the employment index edged higher to 46% while inventories jumped to 50.3%. Regarding inflation, the prices index nudged higher to 54%, possibly giving the Fed some pause when deciding on the extent of the fully priced-in rate cut.
The ISM results were backed up by another PMI reading from S&P, which showed a decrease to 47.9 in August from 49.6 in July.
The S&P employment index showed a decline for the first time this year, while the input cost measure climbed to a 16-month high, another sign that inflation remains present if well off its mid-2022 highs.
“A further downward lurch in the PMI points to the manufacturing sector acting as an increased drag on the economy midway through the third quarter. Forward-looking indicators suggest this drag could intensify in the coming months,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

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A contract covering longshore workers on the East and Gulf Coasts will expire at the end of September, but talks have been stalled over the use of equipment that can function without human operators.When a dockworkers’ union broke off contract talks with management in June, raising the likelihood of a strike at more than a dozen ports on the East and Gulf Coasts that could severely disrupt the supply chain this fall, it was not over wages, pensions or working conditions. It was about a gate through which trucks enter a small port in Mobile, Ala.The International Longshoremen’s Association, which has more than 47,000 members, said it had discovered that the gate was using technology to check and let in trucks without union workers, which it said violated its labor contract.“We will never allow automation to come into our union and try to put us out of work as long as I’m alive,” said Harold J. Daggett, the union’s president and chief negotiator in talks with the United States Maritime Alliance, a group of companies that move cargo at ports.The I.L.A., which represents workers at economically crucial ports in New Jersey, Virginia, Georgia and Texas, has long resisted automation because it can lead to job losses.Longshoremen have grim memories of how past innovation reduced employment at the docks. Shipping containers, introduced in the 1960s, allowed ports to move goods with fewer workers. “You don’t have to pay pensions to robots,” said Brian Jones, a foreman at the Port of Philadelphia, who said he’d vote for a strike if it came to it. He began working at the port in 1974, when bananas from Costa Rica were unloaded box by box. Asked why he was still working at 73, Mr. Jones said, “I like the action, and the money doesn’t hurt.”Workers throughout the economy are worried that technology will eliminate their jobs, but at the ports it threatens one of the few blue-collar jobs that can pay more than $100,000. The United States has done less to automate port operations than countries like China, the Netherlands and Singapore. But the technology is now advancing more quickly, especially on the West Coast.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Americans are being asked to tip more often and in more places than ever before: at fast food counters and corner stores, at auto garages and carwashes, even at self-checkout kiosks. That has rankled many customers and divided both employers and tipped workers.It may soon get worse. Both major-party presidential candidates have embraced proposals to eliminate income taxes on tips, a move that would, in effect, subsidize tipping and prompt more businesses to rely on it.Economists across the political spectrum have panned the tax idea, arguing that it is unfair — favoring one set of low-wage workers over others — and could have unintended consequences. Even some tipped workers and groups that represent them are skeptical, worrying that over the long term the policy could result in lower pay.But the debate alone underscores how service-sector workers have emerged from the pandemic as an economically and politically potent force. The spread of tipping in recent years was, in part, a result of the intense demand for workers, and the leverage it gave them. The presidential candidates’ dueling proposals signal that they see the nation’s roughly four million tipped workers as a constituency worth wooing.“I do think it’s a reflection of this change in which people are finally hearing and recognizing that these workers matter,” said Saru Jayaraman, president of One Fair Wage, an advocacy organization. “Tipped workers had never seen their needs named in any way by any presidential candidate, ever.”Ms. Jayaraman isn’t a fan of the tax exemption idea, though she is optimistic that the attention being paid to the issue could lead to policies she considers more important. One is the elimination of the subminimum wage, which allows businesses in some states to pay workers as little as $2.13 an hour as long as they receive enough in tips to bring them up to the full minimum wage.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Petersburg, Alaska, is as pretty a seaside town as any you’ll find across the filigree of fjords and foggy islands that make up the state’s maritime coast. Statuary and floral designs evidence its proud Scandinavian heritage, and bald eagles soar across the narrow strait that separates it from a national forest. It doesn’t have room for the giant cruise ships that disgorge thousands of passengers into Ketchikan and Juneau, but it is perfectly situated for its sustaining industry: fishing.Norwegian fishermen settled in Petersburg in the 1800s, finding it an ideal jumping off point to pursue salmon, crab and halibut. Hundreds of vessels now dock in there and sell their catch to the two major processors, which head and gut the fish before either canning or freezing it on its eventual path to the dinner table. One of the plants was built more than a century ago, and its owner is the town’s largest private employer.Few people know the business better than Glorianne Wollen, a fisherman’s daughter who operates a large crab boat in a partnership and also serves as harbor master, working from a tiny desk tucked into a bustling office with a little dog at her feet. A Petersburg native, she’s seen a lot of change.“In the good old days, the town was very alive with discussion, everybody was involved so everybody had a stake, everybody knew what was going on, things happened in real time,” Ms. Wollen recalled. That buzz receded as boats got bigger and more efficient, pursued more species and stayed on the water for more of the year to maximize their investment.“It takes two guys to do what 20 used to,” she said. “There’s just fewer of us.”Petersburg doesn’t have room for the giant cruise ships that dock in other Alaskan cities, but it is perfectly situated for its sustaining industry: fishing“There’s just fewer of us,” said Glorianne Wollen, a Petersburg native and fisherman’s daughter who now serves as the town’s harbor master.The Ranks of Alaska Fishermen Are ThinningAcross all fisheries, the number of people holding permits who harvest fish commercially each year has fallen precipitously since the 1980s.

Source: Commercial Fisheries Entry Commission, State of AlaskaBy The New York TimesSalmon Prices Have Been Mostly Flat for DecadesAdjusted for inflation, prices that fishermen are paid per pound of salmon they deliver to processors rose slightly in the 2010s and took a big hit in 2023.

Source: Alaska Department of Fish and GameBy The New York Times More

Inflation remained cool in July, based on the Personal Consumption Expenditures index, keeping the Federal Reserve on track for rate cuts.Inflation held steady in July on a yearly basis and consumer spending was robust, fresh data released on Friday showed, the latest sign that progress toward cooler price increases remains firmly intact even as the economy holds up.The release of the Federal Reserve’s favorite inflation number, the Personal Consumption Expenditures index, showed that yearly inflation was 2.5 percent. That was in line with both the previous month and with economist forecasts.After stripping out food and fuel prices, both of which jump around, a “core” index was up 2.6 percent from a year earlier. That figure gives economists a clearer grasp on the underlying trend in inflation.This month, Fed officials and Wall Street analysts are likely to look closely at the monthly inflation numbers. Because inflation climbed slowly last summer, the annual numbers are being measured against cool readings from last year. When comparing July’s prices to June’s, inflation climbed slightly: 0.2 percent in both the headline and the core measures.The likely takeaway for Fed officials is that inflation continues to gradually moderate — keeping them on track to begin lowering interest rates next month. While the yearly number remains above the Fed’s 2 percent goal, it is down substantially from a peak of more than 7 percent in 2022.This is the last P.C.E. report the Fed will receive before its Sept. 17-18 policy meeting, although officials will get a Consumer Price Index report on Sept. 11. That inflation measure comes out earlier in the month than the personal consumption measure and feeds into the P.C.E. report.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More