Interest Rates May Be Going Higher With Or Without The Fed

The August jobs report exceeded expectations, with strong labor force participation and job gains signaling economic resilience. Markets are repricing the neutral rate higher, as evidenced by rising real and nominal yields, while inflation expectations remain anchored. The Fed may skip a September rate hike, but markets could independently drive long-end rates higher, tightening financial conditions. Gold and other inflation hedges have underperformed, reflecting stable inflation expectations despite higher nominal rates and economic growth.