Payrolls Goldilocks Is Back

June payrolls came in below consensus, cooling short-term pressure on the Fed to raise rates. However, the author cautions that inflation remains a structural risk, suggesting rate hikes will be more prolonged than current market pricing expects.

Key Takeaways

• 1.US payroll growth slowed significantly to 57k in June, though the labor market remains consistently positive.
• 2.Recent labor data reduces immediate pressure on the Federal Reserve to hike interest rates, making a July hike unlikely.
• 3.The author argues that market expectations for early rate cuts in 2027 are misplaced, as inflation pressures will likely force the Fed to maintain a longer hiking cycle.

Table of Contents

• PAYROLLS - GOLDILOCKS IS BACK?
• Where does this leave the outlook for US monetary policy?

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