Friday Economics Roundtable
Payrolls are in, from Bloomberg:
U.S. July Payrolls Rise 113,000; Unemployment Rate at 4.8%
Treasuries, of course, rallied on the report..
3mo - 5.08%
2yr - 4.92%
10yr - 4.90%
@ 8:40
Central banks around the world tightened this week. Australia up 25bps to 6%, the BoE (UK) up 25bps to 4.75%, and the ECB (Eurozone) up 25 bps to 3%. The BoE suprised economists and traders worldwide, it was widely expected that they would pause. Economists are suggesting the possibility for further rate hikes for both the Eurozone and Australia later this year.
U.S. July Payrolls Rise 113,000; Unemployment Rate at 4.8%
Employers in the U.S. added fewer jobs than expected in July and the unemployment rate rose for the first time since November, showing the labor market is losing strength as the economy slows.
The 113,000 increase follows a revised 124,000 gain in June, the Labor Department said today in Washington. The unemployment rate rose to 4.8 percent, from 4.6 percent. The annual increase in hourly earnings slowed.
The figures are the final piece of major economic data before Federal Reserve policy makers gather next week to determine whether to lift interest rates for an 18th consecutive time. Today's report helps strengthen the case for the Fed to pause after two years of rate increases, economists said.
Treasuries, of course, rallied on the report..
3mo - 5.08%
2yr - 4.92%
10yr - 4.90%
@ 8:40
Central banks around the world tightened this week. Australia up 25bps to 6%, the BoE (UK) up 25bps to 4.75%, and the ECB (Eurozone) up 25 bps to 3%. The BoE suprised economists and traders worldwide, it was widely expected that they would pause. Economists are suggesting the possibility for further rate hikes for both the Eurozone and Australia later this year.
18 Comments:
I still think the fed is going to raise again at the next meeting.
I think the next meeting is on the 8th??
SAS
Wow.. 10 year yield down to 4.886%.
The Fed needs to hike, but I've got a sinking feeling they are going to cave-in to pressure and pause.
We're going to be in a heck of a position if the Fed pauses and we see another spike in the GDP (think Q1) or inflation (and inflation pressures) jump even higher.
grim
I think Barry over at Big Picture hit the nail square on the head with his comment..
All the teeth gnashing over a 1/4 point hike -- is there THAT much difference between 5.5% or 5.25%? I find it quite telling, as it it reveals how fragile this recovery actually is. A robust economy with strong job growth and healthy organic expansion wouldn't care a whit about a 5.5% Fed funds rate. Yet the markets have been wailing about the Fed as if they had Bernanke's boot on their collective throats.
For those who don't read The Big Picture, it's another great blog.
grim
"Contemplate this if you will. Most of those who work in my industry are fee based, not salaried. If I close a listing, they hand me a check. But it goes much further than that. If I don't put a buyer under contract, then the home inspector we use does not get a call to come inspect the home. Rick, our mortgage lender friend, does not get a call to arrange a home loan. David, our handyman, does not get a call to come out and make the agreed to repairs. Usually a pre-closing involves painters, perhaps a carpet vendor, and others. They never get a call if there is to be no closing. Jennifer, our closing attorney, does not earn a closing fee.
Does she start to lay off staff when her closing volume drops sharply? Yet if a government bureaucrat drops by to ask if we are employed, well yes, most of us are. We are earning a fraction of what we normally earn, but employed we are. My wife and I are fortunate enough to have been able to save during the good years, but I assure you that most Realtors, and others in related industries, live check to check. Spending will surely fall sharply, probably already is doing so. I am one Realtor. The NAR claims a membership of 1.3 million. Multiply the train of events I portrayed above by a factor of 1.3 million. It's not a pretty picture."
CF and others,
Looking for opinions on the potential impact (macro-level) of the new pension bill.
grim
check this out for a laymans view on real rates...embedded in here is the real scoop about housing...from CNN
http://money.cnn.com/2006/08/03/magazines/fortune/Real_interest_rates.fortune/index.htm
try using this site
www.tinyurl.com
This is quite a bit to chew on.
With other banks raising their interest rates that increases the pressure on the fed to keep pace.
As long as a strong dollar is official policy we're going to have to give people a reason to keep their money here.
I think it's time to face the reality of our situation, and it's not good. The imbalances in the global economy are going to have to reset and many people are going to get hurt, with US being first on the list.
Just about every indicator I can find, jobs, wages, inflation, housing, federal deficit, savings rate, you name it, is pointing down. I think retail sales did OK in the last report, but that's it, and when you consider that is carried by the negative savings rate, that can hardly be considered a positive.
I think I'm going to be having a very dark day.
Lindsey
http://tinyurl.com/hk3sp
Thanks for the tinyurl tip...
Inflation shmation. What will dictate interest rates is how high will we have to go to market with our bonds to sell our debt. If the Chinese stop buying (their economy is slowing), watch out.
"For those who don't read The Big Picture, it's another great blog."
I read that and these:
Argmax
bull not bull
Brad Delong
Calculated risk
Jeff Matthews is not making this up
And Mess That Greenspan Made
FWIW, I think 25 more basis points just because the Euro went up almost 4 cents since the last tightening. I agree with the strong dollar sentiment.
this is great news! the fed will pause on interest rate hikes and give confidence to improve the buyers market, the price declines seen in the last few months combined with the interst rate news should arowse buyers and stabilize the market. good stuff. sorry to those who were waiting for 40pct drops in asking prices, that was kind of a dream huh?
Ahhh, another cast.
Hmmm, who'll take the bait...
Wait, let me get this straight.
You are happy that there are more people out of work?
We've still got a good 6-9 months lag until the current policy works it's way through the system.
grim
I believe the Fed will raise rates another 25, IMO. And it's not the Fed's job to manage the real estate market their supposed to manage inflation.
Fed doesn't care about RE.
Guns & money. Need more money. Years of more money.
Which is the most important goal right now, do you think?
This month seemed to mark a very significant turn in the economy.
Things are only going up from here. The fed has indicated that it is willing to accept higher inflation with higher wage increases.
In the NYC area, inflation is running at a 16 year high of close to 6.00%. But everyone is in this hedonistic party mode and is living in prosperity with a ton of disposable cash.
Consumer confidence is rising even as gas stays at over $3.00 a gallon.
Retail sales are booming with retail sales expected to continue to increase close to 10% over last year excluding autos.
Long Term rates & mortgages are falling. 10 year is back at 4.80%. Probably will fall to 4.00% by Thanksgiving with the fed cutting rates back to 3.00% by this time next year.
BTW, 17 cuts HAVE NOT slowed the economy or have slowed or dampened retail sales which are still booming especially in the NYC area.
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