What the Fed Said

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An almost picture-perfect employment report for June, a drop the mike sort of report. It will not force a change in Fed policy by itself (other issues are in the mix, like trade). Headline outperformed by 18k with the two-month revision +37k. Private payrolls outperformed by 12k with the prior month revised up 11k. Manufacturing was up 36k and positive revisions. How does this sink with The Fed’s model? The unemployment rate up to 4% (was 3.8%) thanks to a rise in labor force participation of 0.2% while hourly earnings tick lower to 2.7%. The likelihood of a December hike continues to be priced in (up now to 59%), but nothing in the data gave running room to an acceleration beyond that, at least thus far. Consensus is tracking a 3+% Q2, followed by about 3% for Q3 and Q4. The Atlanta Fed NowCast in Q3 shows a 3.8% run rate, the NY Fed is at 2.7% while the St. Louis Fed clocks in at 3.3%. May factory orders outperformed (including upward revisions) while durable goods orders also performed well. Things are going well in manufacturing.

An interesting tidbit from Yahoo on the world’s game (soccer): “UK economy boost. England’s unexpected success has delighted fans - leading to a boost for the economy as fans stock up on food, drink and TVs to watch matches on. The match will add £555 million (c. $730mn) of consumer spending to the economy as people stock up on food, drink and memorabilia before Wednesday night’s match, according to The Centre for Retail Research (CRR). If England beats Croatia and makes it into the final, CRR predicts that the World Cup will have boosted spending in the UK by £2.7 billion (c. $3.5bn).” - Special Guest Blogger: Tim Kearney, PhD

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