The data calendar picks up next week, with a host of tier-one releases on the docket.
Without question, the key one is the July employment release. The market expects a 220k rise, which coincides nicely with the 3mma. Labour market data remains a bright spot for the US economy. Indeed, initial jobless claims marked a multi-decade low in mid-July, while the longer-term trend also confirms sharp improvement. Notably, the 3mma moving average of 274.9 marks the lowest levels in claims since the first quarter of 1974.
Markets will also closely watch the ADP release for early reads into the NFP report. Recall, ADP understated NFP in three of the past five reports, so a decent ADP print presents upside risks to the NFP release.
At the same time, Core PCE (Fed’s preferred measure) will be closely watched. The market expects the annual rate to remain steady at 1.2% in June from over a year ago. This reflects the impact of the strength in the USD in H214 and the sharp drop in oil prices. As the influence of these factors moderate, we look for prices to recover in H2.
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