David McNamara: Markets may be pricing in a recession ahead of Fed meeting 

An underappreciated driver of the recent slowdown in jobs growth has also been the pullback in hiring by the public sector in the US

The US economy is slowing but there are few signs a recession is imminent.

Given recent market gyrations, exacerbated by a weaker US payrolls number in July, it is worth asking whether the repricing of Federal Reserve futures markets for aggressive near-term rate cuts is warranted.

Currently, markets are pricing in nearly 100 basis points of cuts by the Fed by end of 2024, pulling back from the near 125 basis points of cuts priced in on Monday, August 5, following the equity market rout. However, while the US economy is slowing, there are, as yet, few signs a recession is imminent.