Quick Read – Core PCE has risen every month for a year, wages hit $37.53, and 30-year Treasuries crossed 5%, boxing Warsh into a hawkish corner. – At 3.75%, the funds rate is already accommodative against hot inflation, and markets price roughly 60% odds of a hike before year…
d. – Trump can complain publicly, but Warsh’s June 17 dot plot and press conference will reveal whether the Fed defends its independence. – On Sunday, Donald Trump told NBC’s Meet the Press that raising interest rates would be wrong, calling it unfair to penalize a strong economy. Kevin Warsh chairs his first Federal Open Market Committee meeting on June 16-17, and the President wants the message received in advance
The problem for Trump is that the data Warsh is looking out hints the opposite. Congress gave the central bank two jobs: maximum employment and stable prices, defined as 2% annual inflation on the core Personal Consumption Expenditures index. Both readings have moved against the doves.
Total nonfarm payrolls climbed to 159.0 million in May, a preliminary figure from the Bureau of Labor Statistics that extends a string of monthly gains running back through January. The unemployment rate held at 4%, sitting in the 9th percentile of its historical range. This is a labor market still running hot enough to keep the Fed cautious.