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Market Outlook

 Fed Officials Dial Back Rate Forecasts, Signal Just One ’24 Cut

Officials acknowledge ‘modest further progress’ on prices

Fed boosts estimate of long-run neutral rate further

Federal Reserve officials penciled in just one interest-rate cut this year and forecast more cuts for 2025, reinforcing policymakers’ calls to keep borrowing costs high for longer to suppress inflation.

They now see four cuts in 2025, more than the three previously outlined.

The Federal Open Market Committee adjusted language in its post-meeting statement released Wednesday, noting there has been “modest further progress toward the committee’s 2% inflation objective” in recent months. Previously, the statement pointed to a “lack” of further progress.

The S&P is still up 0.96% and the 10 year is at 4.29% – no major reaction.

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Market Outlook

 Payrolls Report For May 2024

US Payrolls Rose by 272,000 in May, smashing Estimates of 180,000

The wage gain is also strong, at 0.4%, double the pace of the average hourly earnings advance of the previous month.

The unemployment rate is up, though, that’s as the labor force participation rate fell — unfortunate news for the Fed.

  • May nonfarm payrolls: +272K vs. 182K expected and 165K prior (revised from +175K).
  • Unemployment rate: 4.0% vs. 3.9% expected and 3.9% prior.
  • Average hourly earnings rose 0.4% in May, accelerating from 0.2% in April and topping the 0.3% consensus. Y/Y, average hourly earnings increased 4.1%, compared with the +3.9% consensus and +4.0% in the prior month (revised from +3.9%).
  • Futures are down 0.4% and the 10 Year treasury yield has increased 13 points to 4.43%
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Market Outlook

Jobs Report: June 2024

A good jobs report.

206,000 net new jobs V 190,000 expected.

4.1% unemployment rate, a bit higher than expected, the Feds expected this rate by Dec 2024.

Revisions are the bigger story with 57,000 and 54,000 lower revisions for April and May 2024. So, the 206,000 jobs for June may be revised as well following the trend.

Wage rate – Average hourly earnings climbed by 0.3% in June from the previous month, taking the annual increase to 3.9%.

Futures are flat, and the 10-year has dropped to 4.29%.