Damned if you do, damned if you don’t | investingLive

The dismal jobs data on Friday sent markets for a ride as it kicked into gear Fed rate cut expectations for September. The odds of that swung from ~39% before the data to ~81% now, as traders fear further softness in the labour market. The standout wasn’t so much the headline figure itself but the massive skew lower in the revisions.

Upon the release of the data, Trump was quick to take another jab at Fed chair Powell by calling him a “stubborn moron” that “must substantially lower interest rates, NOW”.

But as the dollar sank and stocks were also routed, Trump shifted to blame to BLS chief, Erika McEntarfer. He claimed that the numbers were woefully wrong and that “we need accurate jobs numbers” as the US economy is “booming”. In saying that, he fired McEntarfer and that’s causing all sorts of chaos domestically and also in terms of market optics towards what’s happening with the US.

So, if the job numbers are good and it reaffirms the Fed stance of pausing, Trump is not going to be happy. But now with worsening job numbers that is helping to nudge the Fed along, he’s also not happy as it paints a bad image of the “Trump economy”. Damned if you do, damned if you don’t.

From threatening central bank independence, Trump is now starting to threaten statistical data independence in the US. I don’t see how that is ever a good thing.

If any of the labour market and inflation data are compromised, how are policymakers supposed to make informed and conscientious decisions? If the Fed and BLS are politicised to just feed whatever numbers Trump want, where exactly does that leave us?

And for markets, the biggest impact of all is that on Treasury Inflation-Protected Securities (TIPS) – in which the basis of its pricing and derivation falls back on how US inflation data (specifically that provided by the BLS) is formed.

If you’re looking for another reason that could damage the credibility of the dollar and other US financial assets, this is just that.