Last week, stocks and bonds came under pressure as investors desperately trying to guess the Federal Reserve (Fed)’s next move focused on stronger-than-expected weekly initial jobless claims, which they interpreted to mean a monetary policy change is imminent.

In my opinion, the anxiety-fueled selloff was extreme considering the fact that US economic data came in mixed last week. Investors ignored a terrible industrial production number and several weak regional manufacturing surveys, just some of the signs lately that the US economy is not taking off and remains stuck at, or below, 2% growth.

But while investors may have focused too much on last week’s labor market data, there is an upcoming US economic number that they should be sure to watch: the August non-farm payroll report due out on September 6th.

In determining the timing of paring back its asset purchase program, the Fed is primarily focused on labor market conditions. Fed officials have been fairly consistent in saying that if the labor market continues to improve at the current pace (about 190k new jobs monthly), they are likely to start to slow the rate of their asset purchase program.

As I write in my new weekly commentary piece, if the August payroll report comes in roughly at 190k, the Fed is likely to announce a start to tapering in the fall, probably as early as its next meeting on September 17th and 18th.

In the meantime, and into September, investors can expect a continued uptick in volatility. Last week, volatility picked up from summer lows amid both growing investor anxiety over the future of monetary policy as well as concerns about escalating violence in the Middle East. And the increasingly bumpy road is likely to continue, as I discussed earlier this month. Market complacency is still high and headline risks are growing ahead of both the Fed’s decision and a potential renewed budget battle in Washington.

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