US Unemployment

Fed and the US Unemployment

NY Fed President Dudley expressed optimism over the economy, saying he expects moderate growth in the second half of this year, albeit considerably slower than in past recoveries. Dudley said "the balance of risks is still tilted toward weakness in growth and employment and not toward higher inflation", suggesting that the Fed will likely maintain low interest rates for some time to come. Lastly, he said that "if the recovery does, in fact, turn out to be lackluster, the unemployment rate is likely to remain elevated and capacity utilization rates unusually low" in the near-term.

The Fed's Beige Book revealed the pace of economic decline had moderated or stabilized at a low level in most districts adding that the manufacturing sector remained subdued but slightly more positive than in the past. The Fed said there was still slack in the labor markets, with most sectors reducing jobs or holding steady and net employment falling.

BOE Meeting for Cheaper Pound

Cheaper Pound

The Bank of England’s Monetary Policy Committee will stick tomorrow with its current plan to spend as much as 125 billion pounds in newly printed money to boost the economy, according to a Bloomberg News survey of economists.

Economic Recovery

The British Chambers of Commerce, a business lobbying group, said an economic recovery “is not guaranteed” and the central bank should extend its quantitative-easing program to the full 150 billion pounds ($243 billion) and seek permission to spend more. BOE policy makers will next meet July 9.

Economic Calendar

Weekly Jobless Claims
The US economic calendar this week is light, consisting of weekly jobless claims, wholesale sales, wholesale inventory, trade deficit and the July University of Michigan consumer confidence report. Weekly jobless claims are estimated to ease slightly to 610k from 614k in the previous week.

Trade Deficit
The trade deficit for June is seen expanding to $30.0 billion versus $29.16.

USD Buoys

Confidence Hits Stocks, Buoys USD
by Korman Tam


Safe-haven moves dictated movements in the foreign exchange market, with the dollar strengthening against most of its counterparts and pushing the euro back toward the 1.40-figure. The US equity market slumped on economic reports released earlier in the session, with the Dow Jones and S&P 500 losing over 1%.

The data this morning included the April Case-Shiller home price index, the NY NAPM index, the June Chicago PMI and the June consumer confidence index. The April Case-Shiller home price index declined by less than anticipated, falling by 0.6% versus a 2.2% drop in the previous month and lower by 18.1% on the year, improving from an 18.8% decline a year prior. The Chicago PMI report for June was inline with consensus estimates at 39.0, albeit up from the May reading at 34.9. The employment component of the PMI increased to 28.9 versus 25.0 while new orders rose to 41.6 from 37.3 previously. The key element in today's data that drove the markets lower was a disappointing report in the Conference Board's June consumer confidence survey, which missed expectations for a marginal improvement to 55 from 54.9 in May, instead falling beneath the 50-level to 49.3 from a downwardly revised reading of 54.8 a month prior.

The economic calendar for the remainder of the holiday-shortened week includes the June ADP private sector payrolls report, May pending home sales, May manufacturing ISM, durable goods orders and on Thursday, the key June non-farm payrolls report, and the June unemployment rate. Tomorrow's ADP private sector payrolls report will be closely scrutinized as a proxy for Thursday's non-farm payrolls, with ADP estimated to improve to -411k versus the previous month at -532k. Meanwhile, the government report on Thursday will likely reveal a larger amount of jobs loss in June at -368k from 345k in May and the unemployment rate is expected to creep up further to a new multi-decade high at 9.4% from 9.2%. ( More.. )