Another Day of Data Dependence
This one should just about do it…
It doesn’t get any more “incoming” than this.Consumer Price Index data for June and initial claims for unemployment insurance data for the week ended July 6 will be released at the same time this morning, 8:30 a.m. ET.
The probability of a September rate cut has already surged to better than 70 percent from 45 percent after Federal Reserve Chair Jerome Powell told the Senate Banking Committee on Tuesday that “elevated inflation is not the only risk we face” and that “the labor market has cooled really significantly across so many measures.”
It’s possible today’s incoming data will provide the incremental confidence our central bankers need before they decide to trim the federal funds target range.
Pretty remarkable the landing Powell & Co. appear to have managed here.
But not one of them will declare any sort of victory.
He again hesitated to share a timeline, but he does “have some confidence” inflation is moving toward the 2 percent target.
Inflation is still a thing, according to Powell, but he’s also focused on “considerable softening in the labor market.”
The target range for the benchmark federal funds rate has been 5.25 percent to 5.50 percent for almost a year now.
Something to consider is the Fed’s growing concern about growth.
Stocks continue to make new all-time highs on expectations good times will continue to roll.
We’ll get a good read on that optimism and whether it’s well founded beginning with earnings reports on Friday from JP Morgan Chase & Co $JPM, Wells Fargo and Company $WFC, and Citigroup $C.