On Friday, we learned from the Bureau of Labor Statistics that US companies added a healthy 215,000 jobs in July, while the unemployment rate declined to a new cycle low of 5.26%. While he remains on track for September liftoff he added, “waiting a meeting or two” wouldn’t be decisive for the economy.
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The central bankers said in a statement after their July gathering that they needs to see “some further improvement in the labor market” to help justify a rate increase, in addition to being “reasonably confident” inflation will move back to its 2 percent goal in the medium term. With Fed Funds futures now indicating a near 50 percent chance of a September rate increase along with a growing choirs of major economic indicators, Hatzius noted a significant point of academic disagreement with the likes of the Fed’s Fischer. The euro appeared to trigger a wave of stop-loss orders around $1.10, which quickly pushed it above $1.1030. “There is definitely no summer lull in the U.S. services sector”. This ratio has been dropping over the years as more individuals leave the workforce.
The Indian ADRs ended mostly in green on Monday, Dr. Reddy’s Lab was up 0.75%, HDFC Bank was up 0.39% and Tata Motors was up by 0.27%. But many frustrated job seekers have stopped looking for work, perhaps only temporarily. So, it is a win-win situation for the U.S. workers. Projected interest rates after this point in time are unknown. Many economists, and as far as I can tell all Keynesian economists, havent figured this out because their analyses are based on models that treat the economy as if it were an amorphous mass instead of what it is an extremely complex network comprised of millions of individuals making decisions for their own reasons. “But it doesn’t lead to a high quality of life”, Nakosteen said. According to data obtained from FRED (Federal Reserve Economic Data), the 10-year breakeven inflation rate has been below the target 2% since September past year.*. While economic growth is strong, “we think there is still a ways to go before full employment”, Hatzius wrote, pointing to weakness in hourly wage growth.
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Should the Fed increase interest rates, the increase would be relatively small. The People’s Bank of China allowed the yuan to depreciate by almost 2% against the U.S. dollar on Tuesday, the result of a surprise policy change that roiled worldwide currency markets. Forward lookingThe much-anticipated Fed interest rate hike in 2015 has yet to occur, with only three meetings left on the calendar. Since rising interest rates raise the required rate of return in all asset markets and also make it more expensive to maintain leverage, other asset prices are vulnerable as well, including those of commercial real estate, corporate debt, single-family homes, and precious metals. It has not raised rates since 2006. If the data continue to fall below Fed expectations, we could very well be having this same discussion again next year. nJames T. Barnes is assistant treasurer of National Penn.
