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U.S. Job Creation Surges, Denting Rate Cut Hopes

Economic IndicatorsJul 05, 2019 09:45AM ET
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Investing.com - The U.S. economy created many more jobs than expected in June, putting a dent in the case for an immediate interest rate cut from the Federal Reserve.

Official government data released on Friday also showed an unexpected, but modest, increase in the unemployment rate, while annual wage inflation held steady. Overall, that's a brighter picture than recent indicators from the manufacturing and housing sectors have painted, but market reaction suggested that there is still widespread belief that the Fed will cut rates when its policy-making committee meets later this month.

Nonfarm payrolls (NFP) rose by 224,000 in June, well above consensus expectations for 160,000 and a sharp rebound from a downwardly-revised 72,000 in May.

The jobless rate unexpectedly rose to 3.7%. Consensus had expected it to remain unchanged at 3.6%, which was the lowest level since December 1969.

Wage inflation grew 3.1% on an annualized basis, holding steady at the prior month’s reading. Consensus had expected an increase to 3.2%.

Markets have convinced themselves that the Fed will soon begin easing policy for the first time in a decade: interest rate futures suggest a quarter-point cut at the July 30-31 meeting is certain, and that there will be three such cuts in total by the end of the year, driven by the need to offset the damage caused by the U.S.'s trade dispute with China.

The data did little to change that conviction. Marc Chandler, managing director of Bannockburn Global Forex, said they merely "keep in check" talk of a half-point rate cut.

U.S. futures extended losses slightly following the release with S&P 500 futures down 0.3% compared to a drop of 0.2% beforehand.

The U.S. dollar index, which measures the greenback against a basket of major currencies, extended gains and was up 0.4% at 96.745, compared to 96.537 immediately ahead of the release.

The benchmark 10-year Treasury yield rose sharply to 2.04%, compared to 1.97% before the publication.

U.S. Job Creation Surges, Denting Rate Cut Hopes
 

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Rjames Elliott
Rjames Elliott Jul 05, 2019 1:18PM ET
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Keep Winning
Daniel Tumusiime
Daniel Tumusiime Jul 05, 2019 10:14AM ET
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Great news
Nicole DiMiceli
Nicole DiMiceli Jul 05, 2019 9:54AM ET
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trump will never see his 27K
Max Chan
Max Chan Jul 05, 2019 9:35AM ET
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I don't understand how unemployment rates could be up when job creation numbers are up. There is also only a 0.1% increase in participation rate. The numbers just don't make sense.
Dar Smith
Dar Smith Jul 05, 2019 9:35AM ET
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You said it yourself.. Workforce participation. Also, immigration and new college grads looking for work
Kamo Mogamisi
Kamo Mogamisi Jul 05, 2019 9:15AM ET
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Buy or Sell?
bomz bomzov
bomz bomzov Jul 05, 2019 9:15AM ET
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use ETF or something similar. never believe brokers
Tim Boyd
Tim Boyd Jul 05, 2019 9:15AM ET
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This data is a joke. It will be revised down by 200k within six months.
Andrew carson
Andrew carson Jul 05, 2019 9:15AM ET
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The forecasts for all of 2019 look to be very low to make the actual numbers look great. hmmmm
Tom OKray
Tom OKray Jul 05, 2019 8:59AM ET
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And Trump doesn't understand economics just wants the cut to make himself look good.
Tom OKray
Tom OKray Jul 05, 2019 8:58AM ET
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Markets will drop as the expected rate cut disappears. Markets should never of had that expectation as there is no certain clear cut decline indicated for the economy.
Gomolemo Mogale
Gomolemo Mogale Jul 05, 2019 8:51AM ET
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this is not good
Tom OKray
Tom OKray Jul 05, 2019 8:51AM ET
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why is a strong economy not good?
Steven Lail
Steven Lail Jul 05, 2019 8:46AM ET
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The Fed could use this data to not lower interest rates as expected. It will be interesting to see how the market reacts.
Raghavendra Rao
Raghavendra Rao Jul 05, 2019 8:39AM ET
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Employment is one of the biggest casualties of right wing governments!
Tom OKray
Tom OKray Jul 05, 2019 8:39AM ET
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Missed again on consensus estimates, typical poor job.
 
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