Markets are playing Federal Reserve (Fed) Clue.
Last week, investors parsed the monthly Employment Situation Summary from the Bureau of Labor Statistics for clues about whether the Fed will raise the federal funds rate at its next meeting or leave the rate unchanged, reported Megan Leonhardt of Barron’s. The Fed has been aggressively raising the rate to slow the pace of inflation. Higher rates typically lead to slower economic growth and fewer jobs, so the employment report offers some signals about the Fed’s progress so far and what may come next.
After perusing the report, investors appeared to agree the Fed was likely to continue raising the federal funds rate. Barron’s reported, “The labor market is still running more warm than cool—June’s jobs data is still well above the baseline standards of a tight labor market—and it builds the case for Fed officials to press the play button and again increase rates in July. On Friday, the likelihood that the Fed would raise rates during the upcoming July [meeting] stood at 94.9%, according to the CME FedWatch tool.”
Here are some of the report highlights:
Overall, the unemployment rate ticked lower (3.6 percent). Generally, low unemployment a sign of economic strength. The unemployment rate varied by race. It was 3.1 percent for the White population, 3.2 percent for the Asian population, 4.3 percent for the Hispanic/Latino population, and 6.0 percent for the Black population.
Fewer jobs were created in June (209,000) than in May (306,000). The slower pace of job creation is one sign the economy may be losing steam. It’s also possible the jobs numbers could prove to be less robust than the first estimate suggests. The preliminary employment numbers for April and May were revised lower in the June report.
Workers took home more pay. Average hourly earnings increased in June and were up 4.4 percent over the last 12 months. That means consumers had more money in their pockets to spend. Since consumer spending is the main driver of economic growth in the United States, this was probably not what the Fed wanted to see.
Last week, major U.S. stock indices finished lower, reported Barron’s Data. Yields on U.S. Treasuries finished the week higher.7
Data as of 7/7/23
Standard & Poor's 500 Index
Dow Jones Global ex-U.S. Index
10-year Treasury Note (yield only)
Gold (per ounce)
Bloomberg Commodity Index
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
IT’S OLD FASHIONED. From cuff-and-collar boxes to floppy disks, the accoutrements of “modern” life change over time. Gadgets and gizmos that were once essential become obsolete as fresh, and often more efficient, options gain a following. See what you know about the way life used to be by taking this quiz.
- Hand-cranked churns were an important tool in many households from the mid-1800s through the 1940s. What were they used for?
- Drying clothes
- Canning vegetables
- Producing butter
- Making wine
- At the time of the Civil War, what was the most common form of communication?
- Patterns of holes in stiff paper proved to be quite valuable in various industries during the 1800s and 1900s. Some punched cards had the phrase “do not fold, spindle or mutilate” printed on them. What were punched cards used to do?
- Automate weaving
- Record and replay harmonium (pump organ) performances
- Process business and government data
- All of the above
- Before computers and smart phones became ubiquitous, people used rotating card files to organize contact information. What were these devices called?
Bonus: The correct answer is a mashup of two words. What are they?
Weekly Focus – Think About It
“That men do not learn very much from the lessons of history is the most important of all the lessons of history.”
—Aldous Huxley, author
Answers: 1) c; 2) b; 3) d; 4) c; Bonus: Rolling and Index
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* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
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* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
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* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
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https://www.barrons.com/articles/june-jobs-report-data-today-b5d93180?mod=hp_LEAD_1 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/07-10-2023_Barrons_US%20Jobs%20Growth%20Slowed%20in%20June_1.pdf)
https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/07-10-23_Barrons_Data_6.pdf)