Treasury yields are another 2-3 basis points (bps) lower following the release of this morning’s economic data, which further feeds the dovish narrative in financial markets of late.
The Employment Cost Index (ECI) grew at a 0.9% q/q pace in Q2, lower than expected and down from 1.2% in Q1. The ECI is a preferred labor cost gauge of the Fed because it includes bonuses and other benefits beyond wages and salaries. Growth in wages and salaries for the private sector slowed 30 bps from Q1 to 0.8%, the slowest quarterly growth rate for the category since Q2 2021. In other news, the Bank of Japan increased its benchmark rate 15 bps to 0.25%, as expected.
All eyes now shift to this afternoon’s FOMC announcement. The general market expectation is for the Fed to signal an initial rate cut at the next meeting in September. However, it seems unlikely that Powell & Co. will go so dovish as to project a particular cadence of future rate cuts, as some market participants seem to expect. At his testimony before Congress a few weeks ago, Powell seemed to be even more emphatic about data dependency and a meeting-by-meeting approach to policy decisions. While recent data has clearly shown moderation in inflation and labor market data, it hasn’t likely been significant enough for the Fed to make such a sharp shift in tone. Fed funds futures are currently priced for a little more than a quarterly pace of quarterly 25 bps cuts beginning at the September 18 FOMC meeting. There will be no updated Summary of Economic Projections following today’s meeting, just the official statement and Powell press conference.
Jason Haley
Chief Investment Officer
| Date | Event | Survey | Actual | Prior | Revised |
| 7/31/2024 | MBA Mortgage Applications | — | -3.90% | -2.20% | — |
| 7/31/2024 | ADP Employment Change | 150k | 122k | 150k | 155k |
| 7/31/2024 | Employment Cost Index | 1.00% | 0.90% | 1.20% | — |
| 7/31/2024 | MNI Chicago PMI | 45 | — | 47.4 | — |
| 7/31/2024 | Pending Home Sales MoM | 1.50% | — | -2.10% | — |
| 7/31/2024 | Pending Home Sales NSA YoY | -7.40% | — | -6.60% | — |
| 7/31/2024 | FOMC Rate Decision (Upper Bound) | 5.50% | — | 5.50% | — |
| 7/31/2024 | FOMC Rate Decision (Lower Bound) | 5.25% | — | 5.25% | — |
| 7/31/2024 | Fed Interest on Reserve Balances Rate | 5.40% | — | 5.40% | — |
| 8/1/2024 | Challenger Job Cuts YoY | — | — | 19.80% | — |
| 8/1/2024 | Nonfarm Productivity | 1.80% | — | 0.20% | — |
| 8/1/2024 | Unit Labor Costs | 1.70% | — | 4.00% | — |
| 8/1/2024 | Initial Jobless Claims | 236k | — | 235k | — |
| 8/1/2024 | Continuing Claims | 1855k | — | 1851k | — |
| 8/1/2024 | S&P Global US Manufacturing PMI | 49.6 | — | 49.5 | — |
| 8/1/2024 | Construction Spending MoM | 0.20% | — | -0.10% | — |
| 8/1/2024 | ISM Manufacturing | 48.8 | — | 48.5 | — |
| 8/1/2024 | ISM Prices Paid | 51.8 | — | 52.1 | — |
| 8/1/2024 | ISM New Orders | 49 | — | 49.3 | — |
| 8/1/2024 | ISM Employment | 49.2 | — | 49.3 | — |
| 8/1/2024 | Wards Total Vehicle Sales | 16.20m | — | 15.29m | — |
| 8/2/2024 | Change in Nonfarm Payrolls | 175k | — | 206k | — |
| 8/2/2024 | Two-Month Payroll Net Revision | — | — | -111k | — |
| 8/2/2024 | Change in Private Payrolls | 141k | — | 136k | — |
| 8/2/2024 | Change in Manufact. Payrolls | -5k | — | -8k | — |
| 8/2/2024 | Unemployment Rate | 4.10% | — | 4.10% | — |
| 8/2/2024 | Average Hourly Earnings MoM | 0.30% | — | 0.30% | — |
| 8/2/2024 | Average Hourly Earnings YoY | 3.70% | — | 3.90% | — |
| 8/2/2024 | Average Weekly Hours All Employees | 34.3 | — | 34.3 | — |
| 8/2/2024 | Labor Force Participation Rate | 62.60% | — | 62.60% | — |
| 8/2/2024 | Underemployment Rate | — | — | 7.40% | — |
| 8/2/2024 | Factory Orders | -3.20% | — | -0.50% | — |
| 8/2/2024 | Factory Orders Ex Trans | — | — | -0.70% | — |
| 8/2/2024 | Durable Goods Orders | -6.60% | — | -6.60% | — |
| 8/2/2024 | Durables Ex Transportation | 0.50% | — | 0.50% | — |
| 8/2/2024 | Cap Goods Orders Nondef Ex Air | 1.00% | — | 1.00% | — |
| 8/2/2024 | Cap Goods Ship Nondef Ex Air | — | — | 0.10% | — |
| 8/5/2024 | S&P Global US Services PMI | — | — | 56 | — |
| 8/5/2024 | S&P Global US Composite PMI | — | — | 55 | — |
| 8/5/2024 | ISM Services Index | 51.3 | — | 48.8 | — |
| 8/5/2024 | ISM Services Prices Paid | — | — | 56.3 | — |
| 8/5/2024 | ISM Services Employment | — | — | 46.1 | — |
| 8/5/2024 | ISM Services New Orders | — | — | 47.3 | — |
| 8/5/2024 | Senior Loan Officer Opinion Survey on Bank Lending Practices | ||||
| 8/6/2024 | Trade Balance | -$72.5b | — | -$75.1b | — |
| 8/7/2024 | MBA Mortgage Applications | — | — | -3.90% | — |
| 8/7/2024 | Consumer Credit | $10.300b | — | $11.354b | — |
