Thursday’s job report all but killed any chance of Fed action in July.
On Hold Until Something Breaks
Data on CME Fedwatch shows market participants believe there is only a 5.2 percent chance the Fed cuts rates in July.
The July 3 nonfarm payroll report was better than expected. In response, odds of a cut plunged from 23.8 percent to 5.2 percent.
Given Powell’s propensity to wait until the Fed understands what tariffs will do to inflation, cuts (or hikes) are on hold until something breaks.
Is everyone ruling out a hike?
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July 2, 2025: ADP Reports 33,000 Job Losses in June with Negative Revisions in May
Small and medium-sized businesses shed jobs in June.
July 2, 2025: Jobs Beat Expectations, Up 147,000 in June, but Government Jobs Rise 73,000
Government to the rescue?
July 3, 2025: The Rise in Continued Unemployment Claims Shows Difficulty in Finding a Job
If you lose a job, it is increasingly difficult to find one.
The jobs picture is quite muddled. But claims data provides the best take.
Unlike small BLS samples with meager response rates of 42 percent on top of that, people file claims quickly when they lose a job. And continued claims are soaring.
The Fed no longer has control of interest rates since the world is dumping the dollar. Soon rates will rise to 20%+ to save the US dollar.
I’d like to learn how many of those new government jobs are ICE or ICE related and also the number of new private sector jobs that are related to the construction of ICE facilities. None of these jobs contribute to our economy.
Name ten Government jobs that contribute to our Econ? And, be more clear as to what you mean: “Contribute.”
Link: George Garvey:
Deposit Velocity and Its Significance (stlouisfed.org)
“Obviously, velocity of total deposits, including time deposits, is considerably lower than that computed for demand deposits alone. The precise difference between the two sets of ratios would depend on the relative share of time deposits in the total as well as on the respective turnover rates of the two types of deposits.”
The ratio of DDs to TDs has doubled during C-19 promoting AD.
You cut in September when long-term money flows peak.
Latest estimate: 2.6 percent — July 03, 2025
I hope Powell can withstand the continuing insults and childish behavior of TACO until such time that a rate cut can be supported by the facts and political pressures.
Suuuuuuurrrrreeeeee
What kind of pusillanimous person capitulates to that kind of idiot schoolyard bully nonsense?
Congress, yes, but other than that?
Have you looked at a single member of Trump’s admin and campaign staff? They all had to take a loyalty oath that includes swallowing whatever Trump puts in their mouths.
On a percentage basis Argentina may have cut government spending more than all other countries, and against the US dollar has fared quite well. More information that our government needs to shrink.
https://www.reuters.com/graphics/GLOBAL-CURRENCIES/gkvlawbjdpb/chart.png
At this point the chart of the yield on the 10yr US bond is deer in the headlights. While the sideways movement for the past 18 months indicate long term (years) of rising interest rates; yields over the next 6-12 months could still drop before resuming much higher.
10Y – 3M ==> inverted. DXY will rise. SPX reached a high barbwire fence.
I see this as good news as lower interest rates exacerbate federal spending and borrowing, two huge drags on the economy. The public sector which generates no wealth must be shrunk so the private sector can use the freed-up resources to invest in profitable ventures. I realize politicians giving away “free” stuff is an effective way to win elections, it is also killing the country, basically confirmation of the old saying, death by a thousand cuts.
I have posted in remarks on related threads documentation supporting the following comments:
Stimulus now has negative efficacy; we cannot grow our way out of the mess with stimulus programs.
Raising taxes does not increase revenue nearly as much as anticipated thus may tweak the problem but not fix it.
Lower interest rates encourage borrowing rather than saving and saving is backbone of capitalism. They also contribute to malinvestment.
Lowering the interest rate reduces the cost to service federal debt in the short term but in the long term the benefit is far exceeded by additional cost because the debt is never paid down.
The fiscal problem is getting worse geometrically, postponing only makes future repair more difficult and painful, especially if a recession or worse develop.
Bottom line, the only to fix the problem is to immediately spend less than revenue.
Spend more on capex. Spend less on entitlements.
And the tens of millions who rely on only Social Security will tar and feather you. 🙂
Something is wrong with our healthcare sector. Use two+ tablespoons
Robust extra virgin olive oil from: CA, Spain, Greece, Bari per day… u reduce mortality by 25%, (-)60% colon and GI cancers, breast cancers, heart disease. If u get chemo + EVOO u reduce side effects and pain. If u have arthritis stick a finger in the bottle and pass it on your neck, hips, max, ankles, shoulders…One tablespoon = 3 teaspoons.
… and then dance 3 times widdershins around the tv while fox is playing at full volume, take 2 cups of horse paste rectally, and build a shrine to maga hat baby jesus.
Your ailments will be cured, and the lord will grant you endless prosperity.
Horse paste is the same as Ivermectin pills. Buffalo lawyer Ralph Lorigo sued hospitals to get them to administer IVM to Covid patients. Won and lost 40 cases. The 40 he lost, 38 of 40 died. the 40 he won, 38 of 40 lived. IVM saved those lives. Maybe you should be listening, rather than mocking Engel’s natural remedies.
Medicaid’s administrative costs are much higher than Medicare’s.
A Robust EVOO, fresh, one year old or less, in a dark glass bottle, can “Extend Life” and reduce Medicaid’s and Medicare’s cost. Two tablespoons+ (50+ gr)/day are good enough, but most doctors don’t know about it, bc it’s easy and inexpensive. Polyphenol cure all. EVOO, watermelon, cooked tomatoes…
Two tablespoons = about 30gr. 3.7 tablespoons = about 50gr.
EVOO lubricate our GI and joints, watermelon don’t.
I am not MAGA. In the last 4 years my comments on Mish are based on Andrew Mellon policies. I am not on Fox. I have no tv box. MSM, I don’t care about them.
We will start with your Soc Sec payments, now or later.
Then there is zero chance the problem will be fixed.
Dave i can see your points. Imo its a complex issue. To me it seems Wealth is generated by work / savings and investment of the individual. there is not much of a difference if its a lawyer or trash collector who is employed in private or government employment. Its what they do with the wages that generates wealth.
I think were gonna find government jobs support a big chunk of the economy. People work for the government pay taxes to the government and spend money on goods and services which generates tax revenue for the gov. And so on and so on.
Dont get me wrong i dont like taxes as much as the next guy. If i have to pay them i at least want it to be spent wisely.
Personally im beginning to think trickle down economics was the original big lie. I would like to see some data on where our finances would be today if we had kept the same tax rates as before Regan lowered the upper end.
The lack of Federal and state income (the smaller taxes collected) to the governments is what started the debt bomb.
Took off about the same time the wealth of the 1% did.
Wonder where all that money went…
The DIDMCA trapped it. Caused the S&L crisis, the rise of the GSEs, and the GFC (as accelerated by Greenspan dropping legal reserves by 40 percent making the banks not reserve e-bound).
as predicted in May 1980 “Sources of mortgage funds will shift from the subsidized rates heretofore provided by the small saver to “bond-backed” sources (as MBS demonstrated) which will reflect the higher interest rates prevailing in the loan-funds markets.”
Your National debt is their wealth! See how that works?
As DR. Ravi Batra pointed out in his book: “Greenspan’s Fraud”:
“If demand and supply are to be balanced over time, then either wages rise in sync with productivity, or productivity growth must be matched by the growth of wages plus debt…so debt growth was the only way to maintain demand-supply equilibrium from the 1970s till today.”
It was predicted in 1961. “Should Commercial Banks Accept Savings Deposits?” Conference on Savings and Residential Financing 1961 Proceedings, United States Savings and loan league, Chicago, 1961, 42, 43.
Note: all monetary savings originate within the payment’s System. And banks do not loan out deposits, they create deposits. Bank-held savings have a zero payment’s velocity. The expansion of interest-bearing saved deposits makes no contribution to gDp.
The demarcation started in 1965 when the banks first outbid the nonbanks for loan funds.
Tax income as a share of GdP isn’t down but debt is way up. Try again.
Yup and if grow your way out worked we woukd not be in the spot were in now.
“Raising taxes does not increase revenue nearly as much as anticipated thus may tweak the problem but not fix it.”
Washington State proved that in the previous biennium budget. So in true liberal tradition they doubled down with another tax hike.
“This time for sure!” said Bullwinkle.
Happy birthday the US. According to Sir John Glubb: The “Fate of Empires” we are dead, dead as most empires in the last 3,500 years. They died when unskilled ruler couldn’t manage centrifugal forces which broke their empire apart.
But we are not an empire. We are a superstate with many similar malaises. Trump saved us from Biden/Harris, the worst presidents in the last 249 years !
And yet mom never had so much money as at the end of Biden. He couldnt have been too bad.
Your tears… show them to me.
Markets’ 90-day tariff pause rollercoaster nears an uncertain end
https://www.reuters.com/world/china/global-markets-tariffs-deadline-graphic-pix-2025-07-04/
“Is everyone ruling out a hike?”
I know that I’m not. I’m just glad that a better-than-expected labor market is going to keep mortgage rates higher for a bit longer. I was getting worried there for a moment with mortgage rates down to 6.70%. In all honestly, I’m personally rooting for higher core PCE inflation.
Moreover, unless you’re rooting for a recession to bring down home prices, the absolute last thing we need are lower rates. Substantially lower mortgage rates will raise prices and might even stabilize parts of FL’s housing market.
Outside of a recession, the best bet we have for lower home prices is slightly higher inflation that forces the Fed to hold rates steady through 2026 or maybe even raise 25 BP to spook the markets. We need a good 20% sell off.
The Wealth effect is largely driving inflation.
I’m also very concerned that the aggregate tax cuts from the BBB are going to seriously juice the economy as we move into 2026.
A large crash in home prices will just cause a different set of people to be in serious trouble (those who go under water with 20% crash in prices).
Having home prices go sideways for a few more years (say till 2030) with inflation running at 3% would in effect reduce home prices by 18% due to inflation. That gets what you want (reduction in prices) without getting a whole of people in trouble (price crash).
I do think you are correct that the BBB is going to juice the economy enough to prevent a recession.
Seniors need a legit interest rate for income without having to take on risk or burn through capital. I don’t understand why AARP hasn’t been screaming this at the top of their lungs.
So seniors should get free money?
Interest is the cost to rent wealth in the form of money. If seniors lend their money (wealth), they are renting an asset, no different than renting a tool or residence for example. It is not free money. Fixing interest rates is no different than fixing rents in NYC, it is government interfering with free market price discovery.
There are also seniors whose bonds have greatly increased in value (bond prices and interest rates go in opposite directions) so they dont necessarily have the losses you’d expect.
And some seniors just invest in very short-term bonds, for the interest.
If you are 70 years old a 30 year bond is rather pointless.
Not if you trade bonds before maturity.
Not everyone does that.
It’s not going to be a good deal if the value of your bond has been hit by inflation.
Intrigued how soon it will be before these numbers become too inconvenient for Trump not to want to meddle with them. Lutnick paved the way for this by disbanding the Federal Economic Statistics Advisory Committee at the end of Feb.
Of course in this case he wants good employment numbers at the same time as wanting an excuse to lower rates. Plenty more numbers that he will want to play with. Then the US can join his mates in the club of number manipulators.
When you supervise the people gathering the numbers, and say you only want happy numbers, you get whatever numbers you want. Its called conflict of interest, three words Donald never allows to get in the way.
No Worries, the BLS is Jerome’s guidepost.It’s all good. /s
XXX Dictators get what they want. If not now, then very soon. The rich (and hedge funds and private equity) want to borrow money at zero percent to continue buying up assets here. The end result is a plantation feudal America, where the lord and the lady owns everything and you get paid in rutabegas, if you work at all. Kiss your fair trial goodbye too. Every plot of land is owed by the lord and you be nice or you are hustled off just like the non-rent payers of Ireland were. Who cares what happens to you.
The only problem is that America has a few unique traits in play that make the situation dangerous for all. There’s really no comparison when it comes to how ludicrously well armed Americans are, and with a rabidly individualist culture deeply baked into the fabric of the nation to boot. I mean, just look at today’s holiday and how we celebrate it (at least down south). If the project 2025 ghouls think they can swing around to a mass rollout of unidentifiable masked men on the streets in small town America, it’s going to be a problem.
In the case America really has jammed a whole entire brick in its spokes, I see Asia becoming the new safe haven for investment. Japan is an extremely stable country and China seems to be greatly bolstered by every single blunder across the Pacific. At this rate they’ll own the EV market and have better AI research at home (thanks to deporting all those Chinese students, that’ll really show em!). I assume China will probably just take Taiwan when America inevitably has to actually solve problems at home instead of pretending they’ll magically disappear next election.
Tl;dr tis the season to bet on red for a change.
China will take Taiwan in the middle of the night, and the US won’t notice.
amerikans bent over and took it up the arse in panic of 2008 when the wall street bankers bailed out themselves. all those guns and flags do no good if one lacks the 2 critical skills to go with them. brains and balls. saddam hussein’s iraq was way more heavily armed then anyone in AZ or SC, 2 states i have lived long term. but it did no good in iraq either. brains and balls and arms. 3 things one needs and quite lacking in pax dumbfuckistan.
The end result of every debt fueled boom, is a bust. But everyone loves the boom which precedes it. Back in the mid 2000’s, anyone who could fog a mirror, was buying up housing assets. It wasn’t just the rich.
It was Klaus Schwab who said to imagine owning nothing and being happy.