Following the release of the minutes of the June Fed meeting, policy makers and investors are now looking ahead for new data. Today the focus is on the June employment report and next Wednesday on the consumer price index, both of which are important for the Federal Reserve Open Committee’s rate hike decision for their next meeting later this month.
The June FOMC minutes confirmed the members’ hawkish stance and their priority to bring inflation down to their 2% target. According to the minutes, only one member voted for a 50 basis point increase at the June meeting. “Participants judged that an increase of 50 or 75 basis points would likely be appropriate at the next meeting,” the minutes said.
Two hawks of the committee, Waller and Bullard, said in two separate events that they support another 75 basis point hike in July. Markets are also pricing such increase at the July meeting, especially considering the expectation of a strong June employment report.
Fear of recession still looms. The Federal Reserve of Atlanta’s latest GDPNow estimate for the second quarter of 2022 is -1.9%. The US GDP shrank by 1.6% in the first quarter, and two back-to-back quarters of negative economic growth are commonly seen as a sign of recession.
According to the US Bureau of Labor Statistics, 372K nonfarm payrolls were added in June 2022, from 384K in May and better than market forecasts of 268K. The US unemployment rate stayed at 3.6% in June 2022, making it unchanged for four consecutive months. Year-over-year average hourly earnings was 5.1% and participation rate was 62.2%. Stock futures fell after a better-than-expected employment report.