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Daily Mail
6 days ago
- Business
- Daily Mail
US jobs growth dashes hopes of July rate cut as Fed takes 'wait and see' approach on Trump tariffs impact
Hopes of a US interest rate cut later this month appeared to have been dashed yesterday after better-than-expected official jobs figures. Closely-watched non-farm payrolls data showed the world's biggest economy added 147,000 jobs in June, beating economists' forecast of 110,000. In contrast, the UK labour market darkened, adding to predictions of a Bank of England rate cut this summer. Experts said the US figures closed the door on the possibility of the US Federal Reserve cutting rates this month. The central bank has come under intense pressure to make cuts from President Donald Trump, who even resorted to personally insulting Fed chief Jerome Powell as a 'stupid person' and 'numbskull'. It has so far resisted, taking a 'wait and see' approach to the impact of Trump's tariffs on inflation and growth. Recently, key officials had seemed open to a change of heart, to head off a downturn in the labour market. But yesterday's figures appear to quash that possibility, which was raised by the Fed's governing board members Christopher Waller and Michelle Bowman. Seema Shah, chief global strategist at Principal Asset Management, said: 'Today's data of higher-than-expected payrolls, a drop in unemployment rate and a fall in jobless claims completely dispels the case for imminent rate cuts.' In Britain, central bankers' worries about jobs are backed up by data and markets see an 80 per cent chance of a Bank of England rate cut, from 4.25 per cent, next month. Yesterday, a monthly purchasing managers' index business survey showed employment in the UK's dominant services sector fell for the ninth month in a row. And while overall private sector growth picked up pace in June, growth for the second quarter will be much slower than the robust 0.7 per cent pace seen at the start of the year. Thomas Pugh, chief economist at accountancy firm RSM, pointed to likely growth of just 0.2 per cent in the April-June period. That, together with evidence of reduced price pressure, 'makes a rate cut in August even more likely', he said. Rob Wood, chief UK economist at Pantheon Macroeconomics, said: 'Happy days as growth improves and inflation slows; the MPC [the Bank of England's monetary policy committee] could welcome the news with another cut in August.'
Reuters
6 days ago
- Business
- Reuters
With job market far from crumbling, Fed to stay on hold
July 3 (Reuters) - A U.S. job market that looks far from collapse despite some strain from higher tariffs and the Trump administration's immigration crackdown is adding to the case for the Federal Reserve to keep short-term borrowing costs where they are for longer. The Labor Department's monthly jobs report on Thursday showed U.S. nonfarm payrolls increased by a bigger-than-expected 147,000 in June and the unemployment rate unexpectedly edged down to 4.1%. A separate report showed initial claims for unemployment insurance dropped. The data decisively closed the door on a July Fed rate cut that had been opened in recent weeks by Fed Governor Christopher Waller and Fed Vice Chair of Supervision Michelle Bowman, who had called for early action to head off labor market deterioration. "Today's data of higher than expected payrolls, a drop in the unemployment rate, and a fall in jobless claims completely dispels their case for imminent rate cuts and implies that there is absolutely no urgency for Fed support," said Seemah Shah, chief global strategist at Principal Asset Management. "We expect the first cut to come in late 2025." The Fed last month left its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December. The decision has drawn fury from President Donald Trump, who feels that with inflation cooling the central bank should be sharply reducing its policy rate. Fed Chair Jerome Powell on Tuesday to "wait and learn more" about how much tariffs push up on inflation before lowering rates again. Rate futures show traders are back on board with that vision, with financial market bets pointing to a September start to rate cuts and a total of just two quarter-point reductions by yearend, not the three rate cuts that they had earlier favored. Thursday's data continued to show the labor market is indeed cooling. Average earnings rose 3.7% in June, coming further into line with what Fed policymakers feel is consistent with their 2% inflation goal. Broadly the report contained plenty of evidence that the Trump administration's trade and other policy changes are reshaping the job market. Manufacturing jobs fell by 7,000, and federal government payrolls also slipped. Restrictions on immigration and the administration's push for deportations also look to be reducing the share of foreign-born workers in the job market. In a poor sign for the outlook, hiring was concentrated in an increasingly narrow range of job types. And labor force participation continued to fall in June, dropping a tenth of a percentage point to 62.3%, after falling two tenths of a percentage point in May. Without that decline, the unemployment rate would have risen sharply to 4.7%, wrote Nationwide's Kathy Bostjancic, who attributed the job market exits to potential workers becoming too discouraged to look for jobs, or to reductions in immigration. "In our assessment, the weak employment report supports our view that the Fed will cut the fed funds rate by 75bps by year-end to bolster a slowing economy despite a likely temporary run-up in prices stemming from tariffs," she wrote. A separate report Thursday from the Institute for Supply Management showed the U.S. services sector picked up in June, though employment contracted, with businesses hesitant to fill jobs, highlighting the economic drag from policy uncertainty.
Time of India
26-06-2025
- Business
- Time of India
Fed fears push dollar to lowest level in 3 years
A battered dollar is taking another beating as investors, unnerved by fresh signs of an erosion in US central bank independence, waste no time in pushing the greenback back to its lowest levels in over three years. US President Donald Trump on Wednesday called Federal Reserve Chair Jerome Powell "terrible" in his latest attack on the central bank chief and said he has three or four people in mind as contenders for the top Fed job. The dollar was back at multi-year lows against a basket of other major currencies on Thursday, erasing a brief respite provided by safe-haven flows related to West Asia tensions earlier in the week. Down 10% so far this year and set for its worst year since 2003, the dollar was expected to weaken further as renewed concern about Fed independence comes amid increased expectations for rate cuts and a looming July 9 deadline for trade agreements. The leading contenders for next Fed chief reportedly include former Fed governor Kevin Warsh, national economic council head Kevin Hassett, current Fed governor Christopher Waller, and treasury secretary Scott Bessent. Seema Shah, chief global strategist at Principal Asset Management, noted that the dollar had not benefited as much as expected in the past two weeks from heightened West Asia tensions, a sign the dollar's safe-haven role had been hurt. In recent years, the currency has risen when oil rallies, but it gained just 0.7% last week. Concern about Fed independence adds to the damage, investors said. Respect for independent institutions such as central banks has long been viewed as a key attraction of major economies, helping anchor economic stability and provide policy certainty. reuters Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Yahoo
23-06-2025
- Business
- Yahoo
One key thing investors needs to remember about the Fed
At its June meeting, Federal Reserve officials still forecasted two rate cuts in 2025. Principal Asset Management chief global strategist Seema Shah says that when it comes to the Fed, there is one key thing that investors need to keep in mind when it comes to the central bank. Find out what it is in the video above. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
BusinessToday
18-06-2025
- Business
- BusinessToday
Oil Prices Surge To Five-Month High As Middle East Fears Mount
Oil prices rallied sharply on Tuesday, with West Texas Intermediate (WTI) crude rising 4.4% to settle at US$74.92 a barrel, hitting its highest level since January amid intensifying fears of a broader conflict in the Middle East. Traders rushed into energy markets following reports that the US could deepen its involvement in Israel's ongoing military strikes on Iran. Former President Donald Trump's public threats and a high-level national security meeting fuelled market speculation of imminent escalation. The geopolitical jitters also pushed up oil market volatility, with a key gauge jumping to a three-year high. Analysts noted that while the Federal Reserve is expected to keep rates steady at its upcoming policy meeting, elevated energy prices could complicate its efforts to maintain a disinflationary path. 'The Fed is walking a tightrope,' said Seema Shah of Principal Asset Management. 'Higher oil prices could become a risk factor if they feed into broader inflation.' Brent crude prices, while not detailed in this session, also saw significant upward movement in tandem with WTI. The crude market's rally comes at a time when economic data from the US is flashing early signs of strain, adding another layer of uncertainty heading into the second half of the year. Bloomberg Related
