From the Atlanta Fed:
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 2.7 percent
on June 29, up from 2.6 percent on June 24. The forecast for
second-quarter real consumer spending growth increased from 4.1 percent
to 4.3 percent after this morning's personal income and outlays release
from the U.S. Bureau of Economic Analysis. This was partly offset by a
decline in the forecast of the second-quarter change in net exports in
2009 dollars from $14 billion to $11 billion after Monday's advance
report on international trade in goods from the U.S. Census Bureau.
near as straight down the line as you can get it. The 4 week average
looks like it's starting to flatten and that could mean that were
nearing a bottom. That could reflect further into other jobs data like
U.S. markets will be shuttered July 4 in observance of Independence
Day, while the rest of the world treats the U.S. exit from the Brits
just like any other Monday.
The Fourth of July is typically
associated with fireworks to commemorate the break from the U.K., but
fireworks came early for global markets last Friday after a so-called
Brexit, or British exit from the EU, emerged the winning side in the EU
referendum, roiling global markets.
far, investors are calmer, at least for the moment. But many traders
could use a longer respite. Here’s the run down of what’s closed in the
With the Independence Day Holiday on the Forth of July, trading in
the US will be focused on the monthly jobs report and minutes from the
latest Federal Reserve meeting, which might reveal discussions about a
rate hike, even when markets expect no change until at least the end of
On Monday, the US commemorates its declaration of independence
from Great Britain. Stock and bond markets will be closed, along with
The holiday-shorten week will be on Friday, when the Bureau of
National Statistics will release its heavy-hitting non-farm payrolls
report for June. After the disastrous May reading, which revealed only
38,000 newly created private sector jobs, it is now expected to post
That would be the third straight month of a reading under 200,000.
It's a great number and comes before the holiday-skewed week.
The improving trend in this series is tough to argue against.
The U.S. economy may have added 287k jobs in June, but we’re not impressed. Judging from the performance of the dollar post payrolls, most forex traders share our views. When the report was first released, USD/JPY jumped to a high of 101.28, but it reversed quickly hitting a low of 99.99.
However the pullback to 100 was short-lived with the currency pair
bouncing back to its pre-NFP level within minutes. Part of this is due
to the rise in U.S. stocks and general improvement in risk appetite. But
100 is also a very important technical level and it is clear that there
were a lot of bids at that rate. Although job growth rebounded
strongly, the unemployment rate rose more than expected and average hourly earnings
growth slowed. Job growth was incredibly weak in May but instead of an
upward revision, the report was revised down by another 27k. And that
leaves the 2-month average at less than 150k. Jon Hilsenrath of the Wall
Street Journal argues that this may be enough for the Fed to raise interest rates in September -- a view we completely disagree with.
While it's true that Fed Fund futures went from pricing in
an 11% chance of tightening in 2016 to 22% post payrolls, there’s no
reasonable case for a rate hike before the end of the year, especially
since we don’t expect any of next week’s economic reports to provide
upside momentum for the dollar. The most important piece of U.S. data scheduled for release next week will be U.S. retail sales, and between the decline in wage growth, the sharp drop in gas prices in June and lower spending reported by the Johnson Redbook survey, all signs point to lower consumer spending and a more restrained increase in consumer prices. Six Federal Reserve Presidents are scheduled to speak but only two (George and Bullard)
are FOMC voters. Both have hawkish leanings but given the deterioration
in U.S. data and Brexit uncertainty, they could indicate that more
caution is needed on raising rates. With two monetary policy
announcements, continued Brexit risks, U.S. retail sales, Chinese trade and GDP numbers on the calendar, we anticipate another volatile week for the greenback. There may not be a tremendous amount of consistency as the dollar should remain weak versus the yen but strong against the European currencies and mixed versus the comm dollars.