SoSoMacro

U.S. jobless claims come in below expectations, Fed officials signal divided views on rate cuts.

Market Performance:

Here’s today’s SoSoMacro Recap — spotlighting the key signals driving markets at this moment:

1. Labor Market: Weekly U.S. jobless claims came in below expectations, potentially influenced by the Independence Day holiday. The data suggests continued labor market strength, reducing urgency for the Fed to cut rates.

2. Fed Commentary: Governor Waller said a July rate cut could be considered; San Francisco Fed President Daly sees the earliest cut likely in the fall;  St. Louis Fed President Musalem emphasized a need to wait and observe. Divisions remain within the Fed, but expectations for a September cut and two rate cuts in 2024 are becoming the market base case.

3. Fed’s Mouthpiece: WSJ reporter Nick Timiraos indicated a July cut is unlikely. Powell may open the door to easing later this summer if labor market softens or inflation improves.

4. Treasury Auction: The U.S. Treasury auctioned $22 billion in 30-year bonds, with steady demand reflected in the results.