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Labor market weakness is Fed’s ‘backstop’: portfolio manager.

The July jobs report came in weaker than expected, putting downward pressure on Treasury yields in Friday’s trading session. With the labor market showing signs of cooling significantly, questions are being raised about the Federal Reserve’s decision to keep interest rates higher for an extended period of time. Kelsey Berro, JP Morgan’s global fixed income portfolio manager, joins Morning Brief to discuss the implications. Berro notes that the jobs report highlighted weakness in “higher-income categories,” with job losses in technology, professional business services and information technology businesses. Meanwhile, job growth was driven by education, health care and government. As for the Fed’s next move, she believes the report “really solidifies a rate cut in September,” but cautions that “it’s just one data point.” “We’ll still need more information,” she told Yahoo Finance, adding, “the market will run with it on the other side.” Berro notes that while the report didn’t change market expectations for a rate cut, it did raise questions about the timing and frequency of future cuts. “If the labor market is actually weakening more materially, and that’s a real circuit breaker, Powell said that at his press conference — then we could be looking at a pace that’s more like once a meeting,” she explained to Yahoo Finance. For more expert insights and the latest market action, click here to watch the full episode of Morning Brief. This post was written by Angel Smith