Increased US employment costs over the last three months rose above the maximum estimate, lifting USD and adding to recent price pressures. Will the Fed respond?
The three-month percent rise in civilian worker’s total compensation rose above the maximum estimate from economists/analysts. The data for the three-month period ending in March rose 1.2% after rising 0.9% in the three months before that, beating estimates of 1%.
The summary of economic projections are not due until June meaning the Fed is more likely to bide its time until then, avoiding the risk of jumping to conclusions. Jerome Powell may simply repeat what he said on the 17th of April concerning recent price pressures, “the recent data have clearly not given us greater confidence and instead indicate that is likely to take longer than expected to achieve that confidence”.
Stay attentive to data ahead of the meeting, for example, the ADP and JOLTs data as they inform the market’s perceptions of the labour market ahead of NFP on Friday. At the end of 2023, markets had priced in between six and seven, while the Fed stands firm on three rate cuts before year end but even this appears optimistic now. US elections in November also complicates the matter further by essentially eliminating a meeting date as the Fed prefer not to move on rates during a presidential election as their was of remaining impartial to politics.
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