Investors assess the impact of sluggish hiring numbers
WEEKLY MARKET COMMENTARY |
With the weak 38,000 increase in May hiring, investors will be closely monitoring Federal Reserve Chair Janet Yellen’s speech on Monday, June 6, for hints about rate path given two subpar months of hiring, which stands in contrast with much stronger spending and housing data over that span. We think that Yellen will walk back recent Fed rhetoric that has strongly hinted at a summer rate hike. Given what appears to be deceleration in private sector hiring and the risks surrounding the June 23 vote in the United Kingdom on whether to remain in the European Union, it makes sense that the Fed would engage in a bit of risk management and push back any rate hikes until the fall when a judgment can be made on employment and the economy, and well after the aftermath of the English plebiscite.
There is a very light week of economic data on the calendar that will feature new labor market information, consumer sentiment, the Fed’s flow of funds estimate of the national financial balance sheet, and first quarter non-farm productivity and unit labor costs. The U.S. Treasury will sell $24 billion in three-year notes on Tuesday, June 7, put to market a $20 billion 10-year note reopening on Wednesday, June 8, and issue $12 billion 30- year note reopening on Thursday, June 9.