We believe if the Fed does not cut by 75 basis points, there is a risk the market would be disappointed. If the Fed does cut by 75 basis points, we do not think that the selling climax would continue past that point.
As the job market gradually improves, it should easily support consumer-spending gains of at least 3.5 percent this year.
Actually there are two pieces of news. One is that although the market consensus was only 250,000, the bond market was fearing a much, much stronger report --hence the relief rally that followed the release of the numbers.
A further deterioration in the labor market is inevitable.
The market has just dodged a bullet. What this report does is remove the likelihood of a Fed tightening on Oct. 5, but we really can't rule out a tightening in November. We have to stay tuned for more economic data.