While market focus has moved away from macroeconomic data and monetary policy, last week was full on both fronts. Data continues to paint a mixed picture.
The housing market is performing particularly poorly, while the jobs market has continued to show signs of a moderate cooling, notably in the weekly jobless claims figures. Other indicators are holding up somewhat better, and the Atlanta Fed GDPNow estimate is currently pointing to a strong rebound in US growth in the second quarter of around 3.5% annualised.
The Federal Reserve acknowledged this uncertainty during its latest policy meeting last week.
The Fed funds rate was kept unchanged, as was universally expected, although the FOMC sounded a slightly more hawkish note than had been priced in, with Chair Powell again describing the US economy and labour market as “solid”, while he brushed aside the soft May CPI report.
However, recent weakness in labour market data is prompting some policymakers to veer towards an earlier cut. We do not think any of these dichotomies will be resolved until we get at least one more data point on payrolls and inflation.
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
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