Janet Mui: weekly economic update 5 July

Friday's unexpectedly strong US job data raises questions about when – rather than if – the Fed will make the first cut to rates


  • Unexpectedly strong US jobs data (published Friday) prompted a dismayed stock market reaction amid fears that the Fed's first rate cut might be further away than previously thought
  • The overall picture is less clear-cut: unemployment ticked up and wage growth disappointed
  • The Federal Open Market Committee (FOMC), which meets again at the end of July, may still view an “insurance” cut of 25 basis points (or 0.25%) as justified in case the economy deteriorates
  • The strong jobs data failed to meaningfully alter the market’s expectation of one rate cut at the July meeting and nearly three rate cuts by the end of 2019


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